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AN ANALYSIS OF STRATEGIC OPPORTUNITIES AVAILABLE TO AN
ENVIRONMENTAL CONSULTING AND ENGINEERING FIRM by
Barbara Gilmore
MSc Computing, De Montfort University 1998
MSc Environmental and Ecological Sciences, University of Lancaster 1990
BSc (Hons) Industrial Chemistry, Paisley/West of Scotland University 1987
PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF
THE REQUIREMENTS FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
In the Executive MBA Program
of the
Faculty
of
Business Administration
© Barbara Gilmore 2011
SIMON FRASER UNIVERSITY
Spring 2011
All rights reserved. However, in accordance with the Copyright Act of Canada, this work
may be reproduced, without authorization, under the conditions for Fair Dealing.
Therefore, limited reproduction of this work for the purposes of private study, research,
criticism, review and news reporting is likely to be in accordance with the law,
particularly if cited appropriately.
ii
Approval
Name: Barbara Gilmore
Degree: Master of Business Administration
Title of Project: An Analysis of Strategic Opportunities available to an
Environmental Consulting and Engineering firm
Supervisory Committee:
___________________________________________
Dr. Mark Frein
Senior Supervisor
Adjunct Professor Faculty of Business Administration
___________________________________________
Dr. Colleen Collins
Second Reader
Associate Professor Faculty of Business Administration
Date Approved: ___________________________________________
iii
Abstract
Company Y is a full-service environmental and engineering consultancy cost leader with
a client base in British Columbia and Alberta. The firm‟s services help both public and private
sector clients meet their environmental obligations under federal, provincial and municipal
government legislation, regulations and programs, as well as meet industry standards, regulations,
and best practice.
Renewable energy, heat savings and energy efficiency initiatives that reduce greenhouse
gas emissions and climate change impact are environmental sector growth areas. Despite being
part of the heat and energy efficiency sector, Company Y‟s Renewable Energy division operates
at a loss.
This paper presents a strategic analysis of the Renewable Energy division‟s primary
service, geoexchange, and discusses the options available to Company Y‟s management team.
Keywords: Environmental Consulting and Engineering; Geoexchange; Heat and Energy
Efficiency; Renewable Energy;
iv
Dedication
To Kasey, my wonderful partner in life. To my family and friends who are always there
when I need them.
v
Acknowledgements
I would like to thank my supervisor, Dr Mark Frein, for his guidance and for this
interesting project. I would also like to express my gratitude to the CEO, the VP of Development,
and staff at Company Y for their time.
I would like to express my gratitude to Dr Colleen Collins for her valuable insight, and
enthusiastic support for this program.
I would like to thank the Executive MBA faculty and staff for their dedication to the
program and for creating a great learning experience.
Finally, I would like to acknowledge and thank my cohort team, SolarFish (Jay Buckley,
Matt Collette and Kiana Mohseni) and the EMBA Cohort 2009.
vi
Table of Contents
Approval ......................................................................................................................................... ii
Abstract ......................................................................................................................................... iii
Dedication....................................................................................................................................... iv
Acknowledgements ......................................................................................................................... v
Table of Contents ........................................................................................................................... vi
List of Figures ................................................................................................................................ ix
List of Tables ................................................................................................................................... x
1: ENVIRONMENTAL CONSULTING AND ENGINEERING SERVICES AT
COMPANY Y ................................................................................................................................. 1
1.1 Introduction ............................................................................................................................. 1
1.2 Company Y: Ownership and Structure ................................................................................... 1
1.3 An Overview of Company Y‟s Services ................................................................................. 2
1.3.1 Business Drivers ......................................................................................................... 2 1.3.2 Environmental Services .............................................................................................. 3 1.3.3 The Renewable Energy Division ................................................................................ 4
1.4 An Overview of Company Y‟s Customer Segments ............................................................... 5
1.4.1 Government ................................................................................................................ 5 1.4.2 Energy ........................................................................................................................ 6 1.4.3 Oil and Gas ................................................................................................................. 8 1.4.4 Mining ........................................................................................................................ 8 1.4.5 Construction ............................................................................................................... 9
2: EXTERNAL (INDUSTRY) ANALYSIS ................................................................................ 12
2.1 The Environmental Consulting Industry ............................................................................... 12
2.1.1 Environmental Consulting Industry Characteristics ................................................. 13 2.1.2 Size of the Environmental Consulting Industry ....................................................... 14
2.2 A Competitive Analysis ........................................................................................................ 15
2.2.1 Rivalry among Existing Competitors ....................................................................... 15 2.2.2 Threat of New Entrants ............................................................................................ 17 2.2.3 Bargaining Power of Suppliers ................................................................................ 17 2.2.4 Bargaining Power of Buyers .................................................................................... 18 2.2.5 Threat of Substitute Products/Services..................................................................... 20 2.2.6 Complementors ........................................................................................................ 20 2.2.7 A Sixth Force of Government Policy and Regulation .............................................. 20
vii
2.3 Key Success Factors .............................................................................................................. 21
2.4 Industry Attractiveness .......................................................................................................... 24
2.5 Strategic Issues within the Industry – PEST ......................................................................... 25
2.5.1 Political .................................................................................................................... 26 2.5.2 Economic Factors ..................................................................................................... 27 2.5.3 Socio/Demographic Factors ..................................................................................... 29 2.5.4 Technological Factors .............................................................................................. 29
2.6 Market Trends and Opportunities: Growth Sectors............................................................... 29
2.6.1 Carbon and Climate Change Mitigation ................................................................... 29 2.6.2 Heat Savings and Energy Efficiency ........................................................................ 29 2.6.3 Renewable Energy.................................................................................................... 33
2.7 Trends and Opportunities: The Canadian Market ................................................................. 35
2.7.1 Size of the Environmental Goods and Services Market in British Columbia .......... 35 2.7.2 Characteristics of the Environmental Sector in Western Canada ............................. 35 2.7.3 The Size of the Environmental Goods and Services Market in Canada ................... 36
2.8 Trends and Opportunities: The Global Market ..................................................................... 36
2.9 Potential New Markets for Company Y ................................................................................ 38
2.9.1 Geoexchange in Alberta ........................................................................................... 38 2.9.2 Geoexchange in Canada ........................................................................................... 41 2.9.3 Renewable Energy in Alberta .................................................................................. 42 2.9.4 The Carbon Offset Market ....................................................................................... 43
3: INTERNAL ANALYSIS ......................................................................................................... 46
3.1 Where Company Y‟s Geoexchange Service Adds Value ..................................................... 46
3.1.1 Geoexchange Technology ........................................................................................ 46 3.1.2 The Renewable Energy Division‟s Geoexchange Service ....................................... 47
3.2 Company Y‟s Resources ....................................................................................................... 50
3.2.1 Human Resources ..................................................................................................... 50 3.2.2 Financial Resources.................................................................................................. 52 3.2.3 Physical Assets ......................................................................................................... 52 3.2.4 Technological Assets................................................................................................ 53 3.2.5 Strategic Assets ........................................................................................................ 53
3.3 Company Y‟s Current Strategies ........................................................................................... 53
3.3.1 Current Corporate Strategy ...................................................................................... 53 3.3.2 Services and Customers (Positioning Strategy) ....................................................... 54 3.3.3 Competitive Strategy ................................................................................................ 55 3.3.4 Functional Strategy .................................................................................................. 55 3.3.5 Strategic Fit .............................................................................................................. 56 3.3.6 Corporate Social Responsibility ............................................................................... 56
3.4 An Analysis of Financial Performance ................................................................................. 57
3.4.1 The Renewable Energy Division‟s Geoexchange Service ....................................... 57 3.4.2 Company Y‟s Financial Performance ...................................................................... 58
4: COMPANY Y: AN ASSESSMENT OF THE PRESENT SITUATION ............................. 61
5: STRATEGIC OPPORTUNITIES AVAILABLE TO COMPANY Y ................................. 65
5.1 Strategic Alternatives ............................................................................................................ 65
5.1.1 Strategy #1: Maintain the Status Quo....................................................................... 65
viii
5.1.2 Strategy #2: Expand the Renewable Energy Division‟s Capabilities
Accompanied by an Expansion into Niche Markets ................................................ 66 5.1.3 Strategy #3: Cease the Renewable Energy Division‟s Geoexchange Service.......... 66 5.1.4 Strategy # 4: Downsize the Renewable Energy Division and Company Y‟s
Unbillable Resources................................................................................................ 67 5.1.5 Strategy # 5: Expand the Geoexchange Service by Acquisition or
Partnership ................................................................................................................ 67
5.2 Possible Future Scenarios ...................................................................................................... 67
5.2.1 Worst-Case Scenario ................................................................................................ 67 5.2.2 Best-Case Scenario ................................................................................................... 68 5.2.3 Most Likely Scenario ............................................................................................... 68
5.3 Evaluation Criteria Based on Company Y‟s Critical Success Factors .................................. 69
5.3.1 Current Mission, Vision and Values ........................................................................ 69 5.3.2 Critical Success Factors ........................................................................................... 69
5.4 Analysis of Strategic Alternatives ......................................................................................... 71
5.4.1 Analysis of Strategy #1: Maintain the Status Quo ................................................... 71 5.4.2 Analysis of Strategy #2: Expand the Renewable Energy Division‟s
Capabilities Accompanied by an Expansion into Niche Markets ............................ 71 5.4.3 Analysis of Strategy #3: Cease the Renewable Energy Division‟s
Geoexchange Service ............................................................................................... 72 5.4.4 Analysis of Strategy # 4: Downsize the Renewable Energy Division and
Company Y‟s Unbillable Resources ........................................................................ 72 5.4.5 Analysis of Strategy # 5: Expand by Acquisition or Partnership ............................. 73
5.5 Company Y‟s Goals and Valuation ....................................................................................... 74
5.6 Scenario Analysis for Company Y‟s Strategy Selection ....................................................... 77
5.6.1 Best-Case Scenario Analysis .................................................................................... 77 5.6.2 Worst-Case Scenario Analysis ................................................................................. 78 5.6.3 Most Likely Scenario ............................................................................................... 78
6: CONCLUSIONS AND RECOMMENDATIONS ................................................................. 79
6.1 Conclusion ............................................................................................................................. 79
6.2 Suggested Implementation Plan ............................................................................................ 80
6.3 Recommendations ................................................................................................................. 80
6.3.1 Underperforming Employees in Company Y‟s Renewable Energy Division .......... 80 6.3.2 Unbillable Employees in Corporate Services ........................................................... 80 6.3.3 Conflicts of Interest .................................................................................................. 81 6.3.4 Downsize, Expand and Re-Brand the Renewable Energy Division ......................... 81
Bibliography.................................................................................................................................. 82
Interviews ....................................................................................................................................... 84
Websites Reviewed ........................................................................................................................ 84
ix
List of Figures
Figure 1 Breakdown of Sales by Environmental Consulting Services in Canada (NAICS 54162)
Figure 2 Porter‟s Five Forces Framework Augmented with a Sixth Force of Government
Figure 3 Why did your firm invest in Energy Efficient Technology?
Figure 4 Reported Obstacles to adopting Energy Efficient Technologies
Figure 5 System Retrofits – Fuel Replaced (British Columbia)
Figure 6 Generation Capacity of Renewable Energy Sources in Canada
Figure 7 Growth of Global Environmental Markets 2000-2010
Figure 8 Global Environmental Services Market Breakdown 2009
Figure 9 System Retrofits – Fuel Replaced (Alberta)
Figure 10 Total Sales – Residential Geothermal Heat Pump Systems in Canada
Figure 11 Electricity Generation by Source in Alberta
Figure 12 National Markets for LCEGS Sector
Figure 13 Growth in the Global Carbon Offset Market
Figure 15 Company Y‟s Geoexchange Service in the Energy Supply Chain
Figure 16 A Design and Build Project Roadmap
Figure 17 Value Chain Analysis: The Renewable Energy Division‟s Geoexchange Service
Figure 18 Company Y‟s Headcount Growth
Figure 19 Company Y‟s Positioning Strategy
Figure 20 Company Y‟s Competitive Strategy
Figure 21 Company Y‟s Revenue versus Profit Margin 2008-2010
Figure 22 Company Y‟s Future Direction – Boston Consulting Group Growth Share Matrix, 1970
x
List of Tables
Table 1 Service – Customer Matrix for Company Y
Table 2 Key Success Factors
Table 3 A Summary of Industry Competitiveness and Attractiveness using Porter‟s Five Forces
Table 4 Canadian Government Revenues, Expenditures and Environmental Expenditures 2005-
2009
Table 5 Future Growth Expectations for Worker Demand in Each Environmental Sub-Sector
Table 6 GHG Savings Potential in British Columbia
Table 7 Market Share by Brand in British Columbia and Installers Market Share in British
Columbia
Table 8 Residential Installations in New and Existing Buildings and Years in Business for Heat
Pump Contractors in British Columbia
Table 9 KW Capacity by Renewable Energy Source in Canada
Table 10 GHG Savings Potential in Alberta
Table 11 Market Share by Brand in Alberta and Installers Market Share in Alberta
Table 12 Estimated Potential Market Value of Residential Retrofit Geoexchange Systems in
Canada
Table 13 GHG Savings Potential across Canada
Table 14 The Renewable Energy Division‟s Financial Performance 2010
Table 15 Company Y‟s P&M, ES&E, and Renewable Energy Division Performance 2010
Table 16 Company Y‟s Weighted Goals
Table 17 Company Y‟s Goal Predictions
Table 18 Company Y‟s Valuation Predictions
1
1: ENVIRONMENTAL CONSULTING AND ENGINEERING
SERVICES AT COMPANY Y
1.1 Introduction
Company Y, founded in 1994 by its current CEO, is a full-service environmental
consulting and engineering firm that sells its professional services on a project time and materials
basis primarily to government, energy, and oil and gas clients across British Columbia (B.C.) and
Alberta. The majority of Company Y‟s 150 employees are located at the firm‟s headquarters in
Downtown Vancouver. Satellite offices exist in Burnaby, Victoria and Calgary, Alberta.
Company Y‟s core services are its assessment offerings in environmental impact,
contaminated land, ecology, and socio-economics, which precede the firm‟s management of
project-specific solutions that include remediation.
Historically, environmental consulting and engineering firms have grown by responding
to new market challenges. Company Y has responded to these challenges by diversifying to
remain competitive.
Renewable energy, heat savings and energy efficiency initiatives that reduce greenhouse
gas (GHG) emissions and climate change impact are just some of the environmental sector‟s
growth segments. Unfortunately, Company Y‟s Renewable Energy division operates at a loss.
The firm‟s CEO concerned about the division‟s revenue, has questioned its future profitability in
the renewable energy market.
This paper presents a strategic analysis of the Renewable Energy division‟s primary
service, geoexchange, and discusses the options available to Company Y‟s management team.
1.2 Company Y: Ownership and Structure
Company Y is a privately incorporated professional partnership with an ownership split
70:30 between its founder and current CEO, and its current VP of Development. A Board that is
comprised of five external advisors, the current CEO, and the current VP of Development
governs the firm.
2
The firm operates with a divisionalized structure along three lines of business that report
directly into the CEO: 1) Corporate Services includes the support functions of Finance, HR,
Marketing and Communications, and Development 2) Planning and Management includes
Ecology and Environmental Management 3) Environmental Sciences and Engineering includes
Geomatics, Infomatics, Engineering, Renewable Energy, Hydrogeology, Site Assessment and
Risk Assessment.
In 2010, Company Y‟s CEO recognized that the firm was not meeting its revenue growth
targets. Employee feedback identified deficiencies in process and systems across business
intelligence, customer relationship management, communications, compensation and
performance management, project, and program management. Declining financial growth
coupled with employee feedback has led to serious questions about underperforming units such as
the Renewable Energy division.
1.3 An Overview of Company Y’s Services
Company Y‟s services help both public and private sector clients meet their
environmental obligations under federal, provincial and municipal government legislation,
regulations and programs, as well as meet industry standards, regulations and best practice.
To remain competitive in the environmental sector, Company Y has leveraged internal
assets to create stand-alone divisions that service existing and new clients. However, the
Renewable Energy division requires a significant investment to grow and diversify further into
the geoexchange value chain, the heat and energy efficiency, and the green building
environmental sub-sector.
Company Y‟s current services and the client segments that use these services are
summarised in Table 1 at the end of this section. This table was adapted from the Product
Customer Matrix created by Boardman and Vining in 1996. However, this report with its limited
scope only examines in detail the Renewable Energy division‟s geoexchange service, and the
firm‟s top five client industries (Sections 1.3 and 1.4).
1.3.1 Business Drivers
The client‟s environmental obligations and Company Y‟s service outputs summarized
below provide additional insight into the firm‟s services.
3
The geoexchange service helps clients meet the requirements of the Greenhouse Gas
Reduction Targets Act administered by the Ministry of the Environment. The outputs
available from this service are a feasibility report, a design report, and a test plan.
The environmental impact assessment (EIA) service helps clients meet the requirements
of the Canadian Environmental Assessment Act and Regulations administered by the
Canadian Environmental Assessment Agency and the Environmental Assessment Office.
The output from this service is an environmental impact assessment report.
The contaminated land and remediation service helps clients meet the requirements of the
Environmental Management Act administered by the Ministry of Environment and
Environment Canada. The output from this service is a site investigation report and a
remediation plan.
The environmental, ecological and risk assessment service helps clients meet the
requirements of the Canadian Environmental Protection Act (CEPA), 1999, administered
by Environment Canada. The output from this service will feed into an environmental
impact assessment report or a stand-alone ecological or risk assessment report.
The carbon and sustainability service helps clients meet the: 1) Climate Action Plan
administered by the BC Government, Ministry of the Environment, BC Hydro and
independent verifiers; 2) Greenhouse Gas Reduction Targets Act (Bill 44 2007)
administered by Environment Canada and the Ministry of the Environment; 3) Clean
Energy Act, Bill 17 2010, administered by the Ministry of Energy, Mines and Petroleum
Resources, and Environment Canada. The output from this service is an environmental
carbon and sustainability report.
Several new opportunities exist for Company Y to help clients conform to the
Greenhouse Gas Reduction Targets (Cap and Trade) Act administered by the Ministry of the
Environment and the Emergency Program Act, and, the Oil and Gas Activities Act administered
by the Ministry of Energy, Mines and Petroleum Resources.
1.3.2 Environmental Services
Long-term environmental impact assessment and First Nations related projects generate
the highest profit margins for Company Y. A three-year standing offer from Public Works and
Government Services Canada (PWGSC) provides the firm with longer-term, but lower margin
revenue streams on contaminated site assessment, risk assessment and ecological projects.
4
Contaminated site and risk assessment projects are predominantly government contracts
and generate lower margins for short-term projects compared to environmental assessment, risk
management, and First Nations projects that are long-term.
Company Y believes its competitive advantage lies with the “great consultants that go the
extra mile” to focus on client needs, a trait that differentiates the firm from its competitors whose
primary focus is profit. Company Y believes that its growth is constrained by a combination of
finances, finding the right people with the right skills to lead the firm into new sectors, and
underperforming employees.
1.3.3 The Renewable Energy Division
Company Y‟s Renewable Energy division is primarily engaged in the feasibility, design
and testing of geoexchange systems for buildings. The division competes in the heat and energy
efficiency environmental sub-sector.
Geoexchange is a relatively new, but commercialized heat and energy efficiency
technology that enables owners to use the ground‟s heating and cooling properties to heat and
cool their property efficiently while reducing GHG emissions. The heat exchange between the
property and the ground uses standard pump and compressor technology, in other words a
geoexchange system. Geoexchange is an alternative to traditional oil, gas or coal fired heating,
ventilating and air conditioning systems (HVAC). Natural Resources Canada (NRCan) and the
US Environmental Protection Agency (EPA) consider geoexchange systems to be the most
energy efficient, environmentally friendly and cost-effective HVAC systems on the market today
(Canadian GeoExchange Coalition, 2011).
Market demand for green construction has increased with changing standards, including
the BC Building Codes, the BC Energy Efficiency Act, Leadership in Energy and Environmental
Design (LEED) certification (administered by the Public Safety and Solicitor General (PSSG)),
and the current standard activity (CSA) in energy C448.2-02 Design and Installation of
Geoexchange Systems for Residential and Other Small Buildings. LEED certification provides
building owners, designers and operators with a framework for the assessment and
implementation of green building design, construction, operations and maintenance (Green
Building Certification Institute, 2011).
In response to this market demand, specialist firms such as heat pump manufacturers,
have developed guidelines and proprietary software for their products to ensure that when a
5
geoexchange system is designed and installed it meets the manufacturer‟s heat pump
specifications.
1.4 An Overview of Company Y’s Customer Segments
Company Y‟s top twenty and top five clients generate 89% and 70% of the firm‟s total
revenue, respectively. The firm‟s revenue streams fluctuate between a government and private
split of 70:30 and 60:40.
1.4.1 Government
Since 1994, Company Y has served a growing client base that includes municipal,
provincial and federal governments. The firm‟s top three clients who account for 46% of the
firm‟s revenue are Environment Canada, PWGSC, and the Ministry of Transportation (MOT).
Environment Canada is a federal government body responsible for protecting the
environment, conserving Canada‟s natural heritage, and providing meteorological information to
the public. Environment Canada implements the Federal Government‟s environmental agenda
through a series of programs and services that ensure the current and future health and safety of
the environment, the population, and the planet. The agency enforces environmental and wildlife
legislation across several domains that include the manufacture and use of toxic substances,
import and export of hazardous wastes and materials, migratory birds, endangered species, the
protection and conservation of domestic and international waters, and the conservation of
renewable resources.
PWGSC is a common service agency for the Federal Government‟s departments,
agencies and boards. PWGSC is Company Y‟s third top client, accounting for 19% of firm
revenue.
MOT is a provincial government body with responsibility for the implementation of the
government‟s transportation agenda, and is Company Y‟s top client, accounting for 21% of firm
revenue.
In conclusion, Company Y has been successful at outbidding competitors to win
government contracts for its environmental assessment and management, ecological assessment
and management, contaminated site assessment and remediation, and risk management services.
6
1.4.2 Energy
The energy industry within British Columbia is dominated by BC Hydro, a government-
owned corporation, BC‟s monopoly producer, transmitter and distributor of electrical power and
Canada‟s third largest electric utility company. BC Hydro is Company Y‟s second top client,
accounting for 20% of the firm‟s revenue.
BC Hydro has 94% population coverage in B.C., and 95% of BC‟s electric power is
generated by an integrated hydroelectric system. Demand for electricity in B.C. is predicted to
grow 25%-45% over the next 20 years and will be supported by a series of conservation, buying,
and building. BC Hydro reports to the B.C. Ministry of Energy, Mines and Petroleum Resources,
and energy policies are detailed in the 2007 BC Energy Plan and 2010 Clean Energy Act. The act
has consolidated BC Hydro and the BC Transmission Corporation into a single entity responsible
for planning and delivering B.C.‟s clean energy while fostering job creation and reducing GHG
(BC Hydro, 2011).
Renewable energy is energy generated from naturally replenishing resources such as
sunlight, wind, rain, tides, and geothermal heat. Renewable energy is a stand-alone
environmental sector that has spawned energy technologies that include solar, wind, biomass,
hydroelectricity, geothermal, and biofuels. BC Hydro generates 54,000 gigawatt hours of
electricity per annum, and the renewable energy projects assessed by BC Hydro had an annual
energy production capacity of 18,000 gigawatt hours. Only biomass, geothermal, small hydro
and tidal current are considered sufficient and commercially viable enough to contribute to BC
Hydro‟s resource mix. Independent Power Producers (IPP) who are small-scale producers of
renewable energy generate 11,400 gigawatt hours per year and include private companies,
municipalities, First Nations, or individual customers working alone or in partnership. Company
Y‟s Environmental Management division‟s clients are IPPs and account for 9% of the firm‟s
revenue.
A 2007 BC Hydro Power Smart geoexchange market assessment identified a potential
4,200 geoexchange retrofits and 6,400 installations for new construction in B.C. which represents
a significant value of potential greenlit project revenue (BC Hydro, 2007). This project also
concluded that single-dwelling residential retrofit and single-dwelling new construction
geoexchange systems failed BC Hydro‟s total resource cost test parameters of conservation and
demand management. Therefore, BC Hydro has chosen not to promote or incentivize single-
dwelling residential geoexchange systems.
7
The Canadian GeoExchange Coalition (CGC) and GeoExchange BC are industry
associations that support and promote the advancement of geoexchange in Canada and B.C.
respectively. A BC Hydro project entitled BC Hydro Phase I Geoexchange Energy Performance
Evaluation is currently underway to evaluate and independently verify the claimed energy
efficiencies set out by CGC in several of their publications. This project, co-sponsored by BC
Hydro, Fortis Energy BC, the City of Vancouver, and Natural Resources Canada, project
managed by GeoExchange BC, and executed by one of Company Y‟s competitors in the
geoexchange market, should provide future direction to the geoexchange industry in Canada.
Until the report‟s publication in May 2011, BC Hydro will provide only indirect sponsorship to
geoexchange projects for the Institutional, Commercial and Industrial (ICI) sector through its
High Performance Building program.
Terasen Gas, now FortisBC, is a $12 billion energy utility company that produces,
transmits, and distributes electrical, natural gas and alternative energy solutions in B.C. The
firm‟s natural gas and alternative energy lines of business serve 940,000 customers in 125 BC
communities, while the electricity line of business serves 161,000 direct and indirect customers in
the southern interior of B.C. The company is capable of planning, designing, and building a
variety of energy and energy-efficient solutions that include geoexchange. FortisBC engages
Company Y‟s Renewable Energy division for some of the more complex geological aspects of its
geoexchange projects and accounts for 1% of Company Y‟s total client revenue.
In conclusion, the renewable energy and heat efficiency market landscape poses several
challenges for Company Y‟s Renewable Energy division: 1) BC Hydro‟s decision not to
incentivize single-dwelling retrofit and single-dwelling new construction geoexchange projects
means that buyer demand is likely to be low in two of the Renewable Energy division‟s
geoexchange market segments; 2) the BC Hydro Phase I Energy Performance Evaluation
contract awarded to one of Company Y‟s competitors will provide this competitor with
invaluable and unique geoexchange portfolio experience; 3) two of Company Y‟s Renewable
Energy division employees sit on the Board of Geoexchange BC. This conflict of interest
excluded the Renewable Energy division from BC Hydro Phase I‟s project selection phase; 4)
the future direction of the geoexchange market in Canada is uncertain until the publication of the
Phase I project report findings in May 2011.
8
1.4.3 Oil and Gas
Canada has the second largest proven oil reserves in the world and produces 2.5 million
barrels per day to make it the world‟s eighth largest producer of crude oil. The world‟s current
oil supply of 86 million barrels per day slightly exceeds demand by 2 million barrels per day.
Canada‟s oil production exceeds domestic requirements and much of Canada‟s oil sells on the
world market, predominantly to the US. Crude oil and gas exports generate revenue of around
$70 billion per year. The industry employs around 300,000 people and contributes $40 billion to
Canada‟s gross domestic product (GDP) (Statistics Canada, 2007).
Oil and gas extraction is capital intensive and much of Canada‟s resources are non-
conventional, for example the oil sands. Consequently, the oil and gas industry (upstream, mid-
stream and downstream) has a significant environmental impact on water, land and air.
Production and processing of oil, natural gas and coal, petroleum refining, and transportation by
pipeline account for 20% of Canada‟s total GHG emissions (Statistics Canada, 2007). Energy
efficient and pollution abatement technologies are an ongoing concern in the sector. Increased
production levels drive up the operating costs associated with resource intensive processes and
will eventually trigger an increase in demand for energy efficiency and pollution control solutions
as firms respond to their environmental obligations. The industry also uses a significant amount
of water in conventional drilling, oil sands surface mining, in-situ production, and upgrading,
refining and petrochemical production. The upstream component of oil and gas accounts for 7%
of total water allocation in Alberta. Although the industry now recycles 90% of its water, its
environmental impact continues to be high.
The oil and gas sector generates 12% of Company Y‟s revenue and is a growth industry
in B.C. and Alberta. This sector provides excellent opportunities for Company Y‟s
environmental management, carbon and sustainability, site assessment, and renewable energy
divisions to provide environmental impact assessment, contaminated land and remediation,
carbon and climate change mitigation, and, heat and energy efficiency services respectively.
1.4.4 Mining
In 2006, the mining industry was worth $35 billion with non-fuel minerals (including
nickel, copper, iron ore, gold and potash) accounting for 91.6% and coal 8.4% of the total
production value. The industry employs around 47,000 people contributing $9 billion or 0.8% to
Canada‟s GDP. The mining industry has implemented responsible mining best practice to
mitigate or eliminate environmental impacts during exploration, planning, operations, restoration
9
and research. This sector provides several excellent opportunities for Company Y‟s
environmental impact, contamination and remediation assessments, risk, ecological, and socio-
economic assessments, and carbon and sustainability services.
1.4.5 Construction
In 2010, the construction industry in Canada was valued at $73.9 billion, and although
slightly higher than its 2009 value of $69.2 billion, still declined from a 2008 peak value of $75.5
billion (Statistics Canada, 2011). The non-residential sector, rather than the residential sector,
will drive industry growth in 2010 and 2011(Canadian Construction Industry, 2011). Residential
sector construction has grown by 0.3% in 2010, with 0% growth in 2011. In 2010, non-
residential, which includes institutional, government and commercial construction, grew by 1.0%-
2.0% in 2010. Employment and investment levels have fallen steadily from 2008 peaks and
growth will decline into 2012. Property developers are clients of the construction industry,
clients of Company Y‟s Renewable Energy division, and a target of all Company Y divisions.
This decline in the construction market has the potential to reduce demand for Company Y‟s
geoexchange and other environmental consulting services.
In summary, Company Y‟s core competencies are in environmental assessment and
management, ecological assessment and management, contaminated site assessment and
remediation, and risk assessment and management. However, the firm has responded to new
environmental challenges by diversifying to remain competitive. Although part of the heat and
energy efficiency environmental growth sector, the Renewable Energy division operates at a loss.
The division faces several challenges and opportunities as it competes in an unpredictable
geoexchange market that is likely to remain so until the publication of the GeoExchange BC/BC
Hydro Phase I Energy Performance Evaluation project results.
10
Table 1 Service – Customer Matrix for Company Y (Adapted from Boardman and Vining 1996)
Customer Public Private
Service Transport:
Port/Air
Transport:
Highway
Utility:
Electric
(Hydro)
Federal Provincial Municipalities Mining Property
Developers
Oil
&
Gas
First
Nations
*Utility
/Eng
Environmental
Assessment and
Management
Socio-Economic
Assessment
Ecological
Assessment
(Terrestrial and
aquatic vegetation
and wildlife)
Carbon and
Sustainability
Assessment
11
Customer Public Private
Service Transport:
Port/Air
Transport:
Highway
Energy:
Hydro
Federal Provincial Municipalities Mining Property
Developers
Oil
&
Gas
First
Nations
*Utility
/Eng
Contaminated
Land Site
Assessment
Remediation
Risk
Assessment &
Management
Hydrogeological
Assessment
Engineering
Renewable
Energy
*Private utility clients include First Nations, and other privately owned non-BC hydro energy projects including IPPs.
12
2: EXTERNAL (INDUSTRY) ANALYSIS
2.1 The Environmental Consulting Industry
The environmental consulting industry is comprised of organizations that provide expert
advice, assistance and recommendations such as the adoption of an approach, process, or strategy
on environmental issues such as contamination, toxic substances, and hazardous material
(Statistics Canada, 2009). Such organizations include environmental and engineering consulting
firms, government owned entities, private sector firms, associations, and non-governmental
organizations (NGOs).
A profound change in attitude across governments, businesses and individuals
worldwide, triggered by climate change, represents a tipping point for the environmental sector.
Governments have responded by introducing new regulations, legislation, and GHG targets in an
attempt to mitigate or eliminate climate change impacts. Such environmental business drivers
have increased demand for products and services that offer prevention at the source rather than
treatment at the end of the product or service lifecycle.
In an industry that serves a highly segmented environmental sector, climate change and
sustainability issues have spawned a new set of environmental markets, which combined with
existing segments, form the Green economy that includes:
Land Management: urban forestry and parks; reforestation and afforestation and soil
stabilization; habitat conservation and restoration: organic agriculture.
Water Management: water purification; water reclamation, grey water and rainwater
systems; low-water landscaping; stormwater management.
Waste Management: Brownfield land remediation; Superfund cleanup; recycling;
municipal solid waste salvage; sustainable packaging.
Renewable Energy: includes solar, wind, geothermal, tidal, biofuels, and fuel cells for
energy generation.
Green Buildings: LEED construction of new buildings; residential and commercial
assessment of existing buildings; Retrofit greening for energy and water efficiency; using
green products and materials.
13
Clean Transportation: car sharing and carpooling programs; alternative fuels; hybrid and
electric vehicles.
To meet market demand, environmental consulting firms including Company Y have
expanded by diversifying into new market segments, in particular targeting some or all of:
Carbon and Climate Change Mitigation: environmental impacts associated with rising or
falling sea levels, air temperatures, and water temperatures, declining or improving air
quality, increasing or declining resource demand, population changes, and natural
disaster management. All represent opportunities for environmental consulting firms
who are able to offer predictive and preventative business services across a product or
service lifecycle.
Heat Savings and Energy Efficiency: energy efficiency initiatives that reduce GHG
emissions and climate change impact.
Renewable Energy Resources: the demand for skills associated with the production and
distribution of energy from renewable energy sources that includes wind, photovoltaic
solar, geothermal, biomass, hydro, ocean and tidal/wave.
2.1.1 Environmental Consulting Industry Characteristics
In Canada, a high number of small consulting firms earn 87.1% of industry revenue while
the 20 largest firms capture 12.9%, a trend that has remained unchanged since 2006 (Statistics
Canada, 2009). Small firms, by definition less than 100 employees, compete with several
medium-sized firms (between 100 and 499 employees) and a few large (500 or more employees)
firms in a monopolistically competitive market structure with low entry, and exit barriers, and
where many incumbents compete on price and service. Although, there are opportunities to
differentiate on service, incumbents compete primarily on price in the public sector, and price and
service in the private sector.
In contrast, US industry data illustrates that firms of greater than 100 employees capture
65% of market revenue, and firms of between 20 and 100 employees capture 17% of market
revenue (EBI Inc, 2010).
In Canada, environmental sector segments such as environmental impact, contaminated
land, and ecological assessment are mature, while carbon and climate mitigation, energy
efficiency and renewable energy resources are growth segments.
14
2.1.2 Size of the Environmental Consulting Industry
In 2008, the environmental consulting and other scientific and technical services industry
generated revenue of $4.2 billion, of which environmental consulting generated $1.64 billion, an
overall increase of 10.4% from 2007, and 32% of total revenue from all consulting services.
Operating expenditures increased 8.4% from 2007. Profit margins on average were 18.6% for
environmental consulting firms and 21.8% for management consulting firms (Statistics Canada,
2008).
Of the total $13.1 billion of revenue from all consulting services (Management NAICS
54161, Environmental NAICS 54162 and other Technical and Scientific services NAICS 54169)
management consulting accounted for $8.9 billion. The consulting service split was 83%:17%
private to public (Statistics Canada, 2008).
A sales breakdown by environmental consulting service illustrates how segmented
Canada‟s environmental sector is (Figure 1).
Figure1Breakdown of Sales by Environmental Consulting Services in Canada (NAICS 54162)
Source: Statistics Canada 2009
15
2.2 A Competitive Analysis
A US based report ranks Company Y as one of the top 500 international environmental
consulting and engineering firms, generating 2009 revenues of US$17 million (EBI Inc., 2010).
Company Y‟s Renewable Energy division provides a feasibility, design and testing service for
District Heating, residential and commercial geoexchange design and build projects. The
division‟s target buyers are engineering firms, construction companies, property developers,
residential, institutional, commercial and industrial property owners. The technical design team‟s
expertise is in geoexchange a relatively new, but commercialized heat and energy efficiency
technology that enables owners to heat and cool their properties efficiently while reducing GHG
emissions.
The division‟s competitive stance analysed below with Porter‟s Five Forces framework
augmented with a sixth force of government and summarized in Figure 2 at the end of section 2.2
(Vining, Shapiro and Borges, 2005).
2.2.1 Rivalry among Existing Competitors
Industry incumbents compete primarily on price when bidding on public sector contracts
that have standard price and technical components. However, on private sector contracts,
incumbents compete on both price and technical expertise. Aided by marketing efforts, it is
possible to increase a buyer‟s willingness to pay. Buyers perceive a difference in an incumbent‟s
services, experience a difference in both technical expertise and in service quality, and are aware
of their consultant‟s reputation. If an incumbent can increase a buyer‟s willingness to pay, the
focus on price diminishes. Therefore, there is an opportunity to service a niche market with a
private sector client who is focused less on price.
Incumbents who are vertically integrated and horizontally diversified are able to offer a
wider range of products and services, some of which cross multiple industries that capture cost
advantages through economies of scope. Company Y‟s Renewable Energy division has captured
a small (5%-10%) portion of total fee revenue on geoexchange design and build projects by being
sub-contracted to the client‟s primary relationship holder who is either the property developer or
the construction company. Company Y could capture a higher percentage of total project revenue
with the appropriate internal resources. However, Company Y‟s internal resources are
constrained on two levels; 1) despite a wide range of services including a sustainability and
energy service, Company Y lacks the necessary CGC accreditation, and project experience to
provide a full-service specialized geoexchange service that includes the build phase or
16
installation; 2) Company Y lacks in-house LEED accredited resources to provide a full-service
LEED green building design that would allow the firm to capture the feasibility, plan, design,
build and test project phases on a green building project with heat and energy efficiency,
including geoexchange and solar components.
Incumbents such as Company Y have both cost advantages and disadvantages associated
with proprietary resources. Proprietary information technology systems that support business
operations are flexible enough to accommodate business enhancements, but at a high cost.
Information technology resources such as geoexchange design and built software could broaden
the Renewable Energy division‟s geoexchange services and increase productivity on geoexchange
projects.
Qualified, accredited, and experienced employees incur higher staff costs compared with
unqualified, non-certified individuals, but are able to secure higher hourly billable rates and
capture a higher proportion of the project value chain while increasing buyer confidence.
Company Y‟s Renewable Energy division is disadvantaged on two levels: 1) constrained by
human and IT resources, the Renewable Energy division is able to capture just a small proportion
of the design and build project revenue; 2) resources charged out at below target chargeout and
billable rates do not contribute to the firm‟s performance goals.
Firms such as BC Hydro and BC Fortis maintain duopoly control over BC‟s energy
market and may decide to retain some or all phases of a geoexchange project in house. Although
unlikely, such a strategy would significantly reduce potential revenue opportunities available to
the Renewable Energy division.
Overall, twenty-five installation companies capture 40 % of the residential market in
Canada, but very few compete with each other because the majority of firms are located in
different regional markets. The top ten installation companies in Canada are responsible for 25 %
of all residential installations. These specialist geoexchange firms have an advantage over
Company Y because they are able to offer the full-service of feasibility, plan, design, build and
test on geoexchange projects while capitalizing on economies of scope and scale.
In conclusion, the Renewable Energy division is currently disadvantaged against its
rivals; and, rivalry among incumbents is moderate to high.
17
2.2.2 Threat of New Entrants
The environmental consulting industry is unregulated and so it is possible for new
entrants to make an easy entry and exit. However, the industry‟s clients are likely to be in a fully
or partially regulated industry, and so new entrants are unlikely to become profitable. Industry
clients prefer to use environmental consulting firms comprised of experienced, knowledgeable
and accredited environmental professionals.
New entrants are typically unable to match incumbents on technical expertise, reputation
and service quality, and so the threat of entry on low price triggers credible retaliation on the part
of incumbents seeking to protect their market share. However, competing solely on low price is
an unsustainable option that lowers profit margins for all competing firms.
A new entrant wishing to capitalize on industry trends with a fast entry and exit would
require operating capital to enter this industry. Investment capital and annual operating costs
associated with proprietary resources in the form of technical expertise are high. Exit costs
increase with time as industry incumbents respond to changes in market demands to remain
competitive.
A full-service geoexchange specialist or a full-service LEED green building design new
entrant competing in the heat and energy efficiency sector would easily be able to displace
incumbents such as Company Y‟s Renewable Energy division. Thus, while overall threat to
industry incumbents is low, Company Y‟s division is open to displacement by these specialist
firms.
In conclusion, the threat from new entrants is moderate.
2.2.3 Bargaining Power of Suppliers
Company Y‟s information systems comprise proprietary supplier software and a mix of
third-party software and hardware. Relationship specific investments are present, incumbent
asset specificity is high and switching costs are high. Third party IT supplier bargaining power is
moderate. Therefore, IT supplier bargaining power is moderate to high.
Company Y‟s Corporate Services division comprises the support functions of Finance,
IT, Human Resources, Facilities, Administration, Marketing and Communications, and Business
Development. Primary functions reside within the Environmental and Engineering, and Planning
and Management divisions. The bargaining power of Company Y‟s skilled resources fluctuates
between high, moderate and low and in line with the external environment‟s demand for their
18
services, and each individual‟s level of skill, experience, qualification and professional
certification. Therefore, their bargaining power also fluctuates between low and high.
In conclusion, supplier bargaining power is moderate to high.
2.2.4 Bargaining Power of Buyers
The buyers of Company Y‟s environmental services are either Government (Federal,
Provincial or Municipal), state or government-owned organizations or private sector firms and
categorized as:
1. A buyer who must comply with their environmental obligations under international,
federal, provincial and municipal government legislation, regulations and programs as
well as with industry standards, regulations and best practices.
2. A buyer who goes beyond the regulatory framework, is proactive, and incorporates social
responsibility and sustainability into their business strategy.
3. A buyer who is voluntarily compliant with some or all environmental requirements under
international, federal, provincial and municipal government legislation, regulations, and
programs, as well as with industry standards, regulations and best practices.
4. A buyer with deep pockets who satisfies their environmental obligations will follow their
own, and not the regulatory authority‟s timeline. Company Y primarily serves buyers in
the first grouping.
Geoexchange systems have two main purposes: 1) to increase a property‟s energy
efficiency 2) to reduce GHG emissions. The geoexchange market segments are: 1) a single-
dwelling retrofit 2) a multiple-dwelling retrofit 3) a commercial, institutional, or industrial (ICI)
retrofit 4) a single-dwelling new construction 5) a multiple-dwelling new construction 6) an
ICI sector new construction 7) a Municipal District Heating Scheme 8) a stamp and review
service. Typically, the Renewable Energy division‟s client will be the property owner or the
property developer. With the introduction of green building codes retrofit, new construction and
District Heating Schemes are required to comply with environmental, resource conservation and
efficiency standards that cover land, air, water and energy across the plan, design, build and
restoration phases of a geoexchange project. Therefore, because of compliance issues a buyer is
more likely to purchase an energy efficiency solution. The likely buyer profile fits with some
client‟s in Company Y‟s current client list.
19
The average single-dwelling residential geoexchange system costs $25,000 to design and
install and represents a sizeable property investment for the average Canadian homeowner.
Although some Canadian provinces offer financial assistance of up to 40% of cost, both B.C. and
Alberta do not. BC Hydro has chosen not to promote or financially incentivize single-dwelling
residential retrofit and new construction geoexchange systems because they cause electricity
brownouts in neighbouring properties and an increase in customer complaints. Therefore,
geoexchange technology fails BC Hydro‟s total resource cost test parameters of conservation and
demand management. In conclusion, a lack of financial incentives and BC Hydro‟s technical
concerns mean that the current buyer interest in geoexchange is likely to be low, and incumbent
opportunities to penetrate the single-dwelling residential retrofits and new construction market
are currently limited.
CGC claims that geoexchange systems reduce GHG emissions, and increase energy
efficiency, are independently unverified. If the results from the BC Hydro Phase I Geoexchange
Energy Performance for direct incentive programs for the ICI sector. In the interim, BC Hydro is
indirectly supporting geoexchange for the ICI sector‟s High Performance Building program.
The future growth of the geoexchange sector across residential, ICI and district heating
schemes is dependent on the results of the BC Hydro Phase I Evaluation study. Therefore,
incumbent opportunities to penetrate this sector are currently moderate,
A buyer has instant access to energy efficiency products, services and prices through the
internet, and a wider choice of incumbents leading the buyer to a lower priced product or service.
Although Company Y‟s Renewable Energy division competes as a cost leader, it is
underperforming which suggest that buyers select a service provider by a combination of price,
service, and reputation.
Buyer switching costs become high once a buyer has signed a contract. Incumbents
recognized that early exit loopholes within their services encouraged buyers to exit without
paying. Company Y requires its client to pay a returnable deposit and fees in advance. An early
exit from an existing incumbent-buyer contract incurs high buyer switching costs. However, a
contract increases an incumbent‟s transaction costs.
In conclusion, the bargaining power of buyers is moderate to high.
20
2.2.5 Threat of Substitute Products/Services
Reputable firms that offer full-service specialized alternative energy efficiency
technologies pose the greatest substitution threat to incumbents. However, a full-service
environmental consulting firm like Company Y through its Renewable Energy, and Energy and
Carbon Services divisions offers an impartial perspective on carbon management, sustainability
and energy efficiency. The firm‟s value proposition is an attractive one for buyers who seek a
recommendation for the best in situ solution.
In conclusion, the threat of substitution is moderate.
2.2.6 Complementors
Company Y already offers a wide-range of complementary products and services that
include sustainability, contaminated land and environmental impact assessment. A choice of
complementary products and services may increase the demand for an incumbent‟s product or
service, but does not significantly increase supplier power.
2.2.7 A Sixth Force of Government Policy and Regulation
The environmental consulting industry is unregulated, but exists to help an incumbent‟s
buyers meet their environmental obligations under international, national, and local
environmental policy, regulation and legislation, as well as professional codes of conduct and
best practices.
In conclusion, the current regulatory and environmental management framework poses
no barrier to entry or exit. However, government policy drives the industry and has a significant,
but indirect impact demand for services.
21
Figure 2 Porter’s Five Forces Framework Augmented with a Sixth Force of Government
Adapted from Porter 1979, and, Vining, Shapiro and Borges 2005
2.3 Key Success Factors
Porter‟s Five Forces analysis identified the environmental consulting industry‟s key
success factors (Table 2). A rank of high means that a firm outperforms the industry average and
poses a threat to its competitors, a rank of medium means there is some competitive advantage
and threat to competitors, a rank of low indicates that there is no competitive advantage, and the
threat to competitors is low or negligible.
The Renewable Energy division‟s main competitors in the geoexchange market are:
22
Competitor A: a small B.C.-based company of between 10 and 20 mechanical and
electrical engineers with an award-winning record in LEED commercial and residential
building design, and a strong client-list that includes multi-national corporations, small
and medium sized firms.
Competitor B: a small B.C. based company of 50 to 100 employees that provides
customized energy solutions for commercial and residential properties. The firm has 65
years of experience, is a full-service CGC certified geoexchange provider, and an IPP.
Competitor C: a small B.C. based company of less than 100 employees with 30 years
experience in the design, installation and servicing of HVAC systems. This CGC
certified firm with 20 years of commercial and residential geoexchange experience has a
strong presence in B.C., Alberta and Washington State.
Competitor D: founded in 1954, is a 5,000 to 10,000 employee, publicly traded
architectural and planning consulting firm headquartered in Edmonton, Alberta with an
extensive North American presence. The firm has diversified into the environmental
sector to provide environmental and waste management services. The firm has extensive
LEED experience across all building sectors, including geoexchange, and secured the
contract for BC Hydro‟s Phase I Geoexchange Energy Performance Evaluation project.
23
Table 2 Key Success Factors (Source: Author 2011)
Key Success Factor Category of Threat RE Div.
Company
Y
Competitor
A
Competitor
B
Competitor
C
Competitor
D
Price Rival, New Entrants & Buyers
High Low-Medium Medium Medium Low-Medium
Reputation/Trust/Quality Rival and Substitutes Low-
Medium
High Medium Medium-High High
Product and Service Range Rival Medium-
High
Low-Medium Low-Medium Low-Medium Medium-High
Service Differentiation Rival and Substitutes Low-
Medium
Medium Low-Medium Low-Medium Medium-High
Full-Service Building
Specialization (Green/LEED)
Rival Low High Medium-
High
High Medium-High
Full-Service Geoexchange
Specialization
Rival, New Entrants and
Substitutes
Low-
Medium
High High High Medium-High
Impartiality Rivals and Substitutes High Medium Low Low-Medium Medium-High
Partnerships with
Complementors
Rivals Low-
Medium
Low-Medium Low-Medium Low-Medium Medium
Costs: Specialists Supplier Medium High Medium Medium High
Costs: Generalists Supplier Medium Low Low Low Medium
24
2.4 Industry Attractiveness
Industry profitability levels tend to be firm specific, but profit margins on average are
18.6% for environmental consulting firms (Statistics Canada, 2008). Table 3 below summarizes
the industry‟s degree of competitiveness and attractiveness.
Table 3 A Summary of Industry Competitiveness and Attractiveness using Porter’s Five Forces
Porter’s Five Forces Degree of Threat
Intensity of Competition Moderate to High
Threat of Substitutes Moderate
Threat of New Entrants Moderate
Bargaining Power of Suppliers Low to Moderate to High
Bargaining Power of Buyers Moderate to High
Government Policy/Regulations High
Other Aspects Ability to Alter Status Quo:
Government Regulation Government environmental policy and regulation
increases or decreases the demand for the
incumbent’s services.
Technology Changes New environmental technologies have the potential to
change an industry segment’s supply and demand
curve.
Overall Industry
Competitiveness
Moderate to High
Overall Industry
Attractiveness
Moderate
Source: Author 2011
25
In conclusion, the environmental industry continues to be a moderately attractive one.
Firms like Competitor D, with a combination of specialists and generalists, a high market
penetration rate, a strong technical reputation, and a range of products and services derived from
the firm‟s core competencies claim a modest 6.19% profit margin on revenues of $1.513 billion,
one that is lower than the industry average of 18.6%, and Company Y‟s 6.49%. Although the
industry average is associated with small firms of less than 100 who generate higher profit
margins, these figures illustrate the competitive nature of the environmental consulting industry,
as well as some of the financial performance challenges such as operating costs and revenue
faced by medium and large firms.
2.5 Strategic Issues within the Industry – PEST
Historically, government policy, environmental legislation, and regulations have driven
the demand for environmental consulting services as firms comply with regulatory requirements
to avoid financial penalties and damage to their reputation. Increasingly, buyers of environmental
consulting services do so because of economic, social, and environmental benefits, collectively
known as sustainability, and are thus engaged in voluntary, rather than mandatory compliance. In
summary, the drivers of growth in the environmental market are:
Environmental policy, regulations, and legislation that includes direct government
spending on the environment, environmental regulation and legislation, and economic
incentives.
Financial and economic factors that influence operational practices, improve efficiency,
and reduce emissions and energy costs.
Customer demand for environmental goods, services and eco-friendly practices.
Evolving environmental management practices, product lifecycle assessments and
business policies.
Changes in government regulations and a desire for sustainability in both the public and
private sectors have increased demand for green environmental products and services.
The demand for sustainability shapes the future of the environmental industry‟s market to
create opportunities for firms that are able to meet buyer demand in new market segments.
26
2.5.1 Political
The environmental consulting industry is unregulated, but the industries the sector serves
tend to be highly regulated. A government‟s environmental agenda influences environmental
policy, regulation, and legislation, as well as industry regulations and best practice therefore,
influencing the environmental sector at a global, federal, provincial and municipal level.
60%-70% of Company Y‟s revenue comes from government contracts, which makes the
firm particularly vulnerable to the current economic climate of government deficits, budget cuts,
recession and recovery. Despite the 2008 recession, and an unpredictable economic landscape,
Canadian government environmental expenditure has grown at a higher annual rate than total
expenditures (Table 4). In previous business cycles during the recession and recovery stages,
environmental expenditure has decreased. The government‟s willingness to increase expenditure,
despite such economic uncertainty, is further proof that the environmental sector has reached its
tipping point (Section 2.1).
Table 4 Canadian Government Revenues, Expenditures and Environmental Expenditures 2005-2009
Source: ECO Canada 2010
27
2.5.2 Economic Factors
The Canadian environmental sector employs 3.2% of total workers, a level that is greater
than the Pharmaceutical or Aerospace sectors. Government and industry policy together with
macro-economic factors determine the environmental cost of compliance. Climate change in
particular has had a profound influence on government policy and for the next five years
government and private sector spending will continue to drive the environmental or green
economy more than any other factor. The environmental sector‟s emerging and growth sub-
sectors are reflected in employment trends that show an increased demand for workers in carbon
and climate change mitigation, heat savings and energy efficiency (Table 5).
28
Table 5 Future Growth Expectations for Worker Demand in Each Environmental Sub-Sector
Emerging & Very High
Growth
Emerging & High Growth Stable Growth Flat Growth Declining Growth
Carbon & Climate
Change Mitigation
Environmental
remediation
Protection of ambient air quality
Water quality
protection
Agriculture
including
organic farming
Heat Savings &
Energy Efficiency
Eco-innovation &
environmental R&D
Water systems design for water
supply
Operation of water
& wastewater
facilities
Sustainable
forestry
Renewable Energy
Resources
Environmental health
and safety
Waste management
Noise & vibration
abatement.
Conservation of
wildlife &
fisheries
Alternative Fuels &
Alternative Fuel
Vehicle
Protection of biodiversity
& protection of
landscape.
Environmental education
Environmental Policy &
legislation
Minerals
Management
Environmental communications
& environmental public
awareness.
Source: ECO Canada 2010
29
2.5.3 Socio/Demographic Factors
Climate change has heightened the public‟s awareness of environmental issues and has
driven the increased demand for environmental goods and services.
2.5.4 Technological Factors
Disruptive and emergent technologies such as wind power, solar power, tidal power and
geoexchange have displaced old and environmentally damaging technologies such as oil and coal.
In conclusion, PEST factors have a significant influence on the environmental consulting
industry.
2.6 Market Trends and Opportunities: Growth Sectors
The environmental market is highly segmented by service type and client industry. North
American market data indicates that assessment and audit have generated the highest year on year
revenue since 1995. The expectation is that the global environmental goods and services market
will grow at between 4.7% and 7.7% per year (ECO Canada, 2010). The sector‟s growth areas
are in carbon and climate change mitigation, heat savings and energy efficiency, and, renewable
energy resources.
2.6.1 Carbon and Climate Change Mitigation
Services that assess environmental impacts associated with air, water or land resources
impacted by climate change all represent opportunities for environmental consulting firms that
are able to offer predictive and preventative business services across a product or service
lifecycle. Company Y‟s services offerings in this sector are currently limited.
2.6.2 Heat Savings and Energy Efficiency
The demand for heat savings and energy efficiency products and services continues to
increase. Firms that are willing to diversifying will capture a higher market share of this growing
environmental sub-sector. Environmentally aware buyers still seek a “sufficient return on their
investment” (Figure 3). However, despite an increased demand, some barriers to market
penetration continue to exist among those buyers reporting obstacles as cost and lack of
knowledge (Figure 4). In conclusion, pricing is important, but as buyer demand increases, the
average price of the technology should decrease.
30
Figure 3 Why did your firm invest in Energy Efficient Technology?
Source: ECO Canada 2010
Figure 4 Reported Obstacles to adopting Energy Efficient Technologies
Source: ECO Canada 2010
2.6.2.1 The Geoexchange Market in British Columbia
The Canadian GeoExchange Coalition‟s comparisons of traditional property heating and
cooling systems show expected geoexchange GHG reductions (Table 6).
31
Table 6 GHG Savings Potential in British Columbia
Source: Canadian GeoExchange Coalition 2010
The average B.C. single-dwelling residential owner will pay $22,689 for a closed
horizontal geoexchange system (51.54% of systems sold) which is $1,300 less than the Canadian
average; and, $27,889 for a closed vertical system (31.06% of systems sold) which is $114 less
than the Canadian average of $28,003. Of the other system types sold, 2.39% of systems are
pond or lake loop, and 15.02% are open loop.
Unfortunately, financial incentives for residential geoexchange systems are not available
in B.C. or Alberta, unlike the rest of Canada where the average government funded incentive is
$9,000-$10,000. With an estimated 970,000 single detached homes in B.C. the single-dwelling
retrofit market has the potential to generate an estimated $22 billion with 100% penetration. The
lack of financial incentives coupled with mixed messages from the geoexchange industry has
resulted in B.C. buyers opting for alternative technologies or the status quo. However, despite
buyer uncertainty, there is still some residential demand for geoexchange system retrofits that
replace inefficient and GHG emitting technologies (Figure 5).
Figure 5 System Retrofits – Fuel Replaced (British Columbia)
Source: Canadian GeoExchange Coalition 2010
32
Market competition and labour costs account for some of the price differentials across
Canada. Within B.C., the top heat pump brand has a 43.57% market share and the top three
installers capture around a 29.35% market share (Table 7). With the exception of specialist firms
such as Competitor C, the primary consultant or developer will sub-contract the installation of the
geoexchange system, which is the Renewable Energy division‟s current strategy.
Table 7 Market Share by Brand in British Columbia and Installers Market Share in British Columbia
Source: Canadian GeoExchange Coalition 2010
In B.C., installers have an average of 7.5 years in the geoexchange business, 82.5% of
installations are for new residences compared to 17.5% for existing residences. In Saskatchewan
54.1% of geoexchange installations were retrofit and 45.9% for new residences; in Ontario 66.8%
were system retrofits compared to 33.2% for new residences. An Ontario installation firm has
been in the business the longest with 11 years experience (Table 8). Being a slightly more mature
market with a higher proportion of residential heating system technologies like oil and coal, the
retrofit market demand was significantly stronger than the demand for new installations moving
west to east across Canada.
33
Table 8 Residential Installations in New and Existing Buildings and Years in Business for Heat Pump
Contractors in British Columbia
Source: Canadian GeoExchange Coalition 2010
2.6.3 Renewable Energy
Renewable energy is energy generated from naturally replenishing resources such as
sunlight, wind, rain, tides, and geothermal heat. Renewable energy is an environmental sub-
sector and part of an industry that has spawned new technologies that include solar, wind,
biomass, hydroelectricity, geothermal, and biofuels.
92% of Canada‟s renewable energy generation capacity is hydropower generation (Figure
6). At 6%, biomass is the second largest component. Renewable energy production sources have
grown steadily since the 1980s at an average annual growth rate of 1.1% (Table 9).
2.6.3.1 The Renewable Energy Market in British Columbia
The increased demand for renewable energy is a result of the government‟s
environmental agenda and changes in industry best practice. The proliferation of IPPs to satisfy
the demand for renewable energy power has provided environmental consulting and engineering
firms with opportunities to diversify their services to meet market demands and remain
competitive. Company Y has been successful in meeting such demands through its wind power
environmental impact assessment service.
34
Figure 6 Generation Capacity of Renewable Energy Sources in Canada
Source: ECO Canada 2010
Table 9 KW Capacity by Renewable Energy Source in Canada
Source: ECO Canada 2010
35
2.7 Trends and Opportunities: The Canadian Market
The environmental good and services market in Canada is segmented and is dominated
by a high number of small to medium sized firms (SMEs) of less than 100 employees, several
medium (100-499), and a few large (500+) firms.
Company Y would like to expand its operations nationally. This section examines the
current national markets and provides an overview of potential opportunities.
2.7.1 Size of the Environmental Goods and Services Market in British Columbia
In 2004, the environmental goods and services market in British Columbia was valued at
$2,300 million with 1,352 environmental firms. Sales of environmental services were $1,314
million (Statistics Canada, 2008). Environmental issues important to B.C. include fresh water,
climate change, and contaminants, ecosystems, and species conservation.
2.7.2 Characteristics of the Environmental Sector in Western Canada
Approximately 2,900 environmental sector firms exist in Western Canada employing
56,000 people (Western Economic Diversification Canada, 2010).
Western Canada includes the provinces of Alberta, British Columbia, Manitoba and
Saskatchewan. Each province has its own unique set of environmental sector characteristics:
Alberta: Canada‟s third largest environmental market behind Ontario, and Quebec, has an
industry that supports the province‟s energy resources and manufacturing sectors.
British Columbia: Canada‟s fourth largest environmental market, has established itself
with transportation fuel cell technology, water and wastewater management, and LEED
compliant buildings.
Manitoba: Canada‟s fifth largest market is focused on research and development in
geothermal, biofuels, transportation refueling systems, and wind energy.
36
Saskatchewan: Canada‟s fifth largest market is primarily focused on providing impact,
audit, and regulatory studies with particular focus on clients in the energy, agriculture and
mining sectors.
In conclusion, there are several opportunities for Company Y to penetrate existing
markets across Western Canada with the firm‟s existing services in EIA and ESA, particularly in
Alberta and Saskatchewan.
2.7.3 The Size of the Environmental Goods and Services Market in Canada
In 2008, the sale of environmental products manufactured in Canada generated $2.3
billion in revenue, $966 million involved machinery, equipment and product sales associated with
renewable energy production. Environmentally related services generated the remaining $1.8
billion or 44% of total environmental goods and services revenue of $4.1 billion. Environmental
consulting services generated 78% of service sector revenue or $1.4 billion. Site remediation and
emergency environmental services generated 22% or $360 million of environmental service
revenue (Statistics Canada, 2009).
In terms of provincial breakdown, the most recent and available data from 2004 showed
that Ontario generated 43% of total environmental goods and service revenue, with B.C. on 13%
and Alberta on 15%.
In 2010, the environmental goods and services market was valued at $29 billion and
employed 166,000 people (Industry Canada, 2010).
2.8 Trends and Opportunities: The Global Market
Company Y would like to expand its operations internationally. This section examines
the current global market and provides an overview of potential opportunities.
Canada represents 1.7% of the global market for environmental goods and services and
from the years 2000 to 2010, the Canadian market value grew at an average 7%-9% per annum
(Figure 7). Canadian exports to the United States were valued at $770 million, $20 million to
Mexico and $210 million to other international markets.
37
Figure 7 Growth of Global Environmental Markets 2000-2010
Source: Statistics Canada 2004
The global environmental services market encompasses a broad range of organizations
that engage in the management of the environment and include waste management firms,
consulting and engineering firms, analytical services firms, remediation, and industrial service
firms.
The global market comprises North America (Canada, United States and Mexico); South
America (Argentina, Brazil, Chile, Columbia and Venezuala); Western Europe (Belgium,
Denmark, France, Germany, Italy, The Netherlands, Norway, Spain, Sweden and the United
Kingdom); Eastern Europe (The Czech Republic, Hungary, Poland, Romania, Russia and the
Ukraine); Asia Pacific (Australia, China, India, Japan, Singapore, South Korea, and Taiwan).
In 2009, the global environmental services market was valued at $228.5 billion, and by
2014, its predicted value is $276.4 billion (DataMonitor, 2010). Consulting and engineering
firms generate $36.56 billion or 16% of market revenue. By 2014, the value of consulting and
engineering services will rise to $44.224 billion assuming that the consulting and engineering
firm‟s market share remains constant (Figure 8).
38
Figure 8 Global Environmental Services Market Breakdown 2009
Source: DataMonitor 2010
In conclusion, the national and global markets are highly competitive and although one of
the top 500 international environmental consulting and engineering firms with 2009 revenues of
$17 million, Company Y need to either create new demand in an uncontested market space or
capture an existing incumbent‟s market to increase its national and global rank.
2.9 Potential New Markets for Company Y
Company Y‟s current priority is the viability of its Renewable Energy division‟s
geoexchange services and the division‟s market opportunities in B.C. (Section 2.6.2.1), Alberta,
and Canada. This section examines immediate opportunities in Alberta and Canada that are
currently available to Company Y.
2.9.1 Geoexchange in Alberta
The Alberta geoexchange market offers some opportunities for Company Y. The
expected GHG reductions in Alberta property heating, and cooling systems using replacement
residential geoexchange systems is significant (Table 10).
39
Table 10 GHG Savings Potential in Alberta
Source: Canadian GeoExchange Coalition 2010
The average Alberta single-dwelling residential owner will pay $22,111 for a closed
horizontal geoexchange system (18.6% of systems sold) which is $2,000 less than the Canadian
average; and, $30,399 for a closed vertical system (72.09% of systems sold) compared to the
Canadian average of $28,003Lower drilling costs reflect regional geology and a competitive
drilling market explain the lower cost of horizontal systems. However, a higher willingness to
pay for a closed vertical system is reflected in its higher price. Of the other system types sold
2.33% are pond or lake loop, and 6.98% are open loop. In the retrofit market 83.9 % of the
installations replaced natural gas, 6.5 % electricity, 6.5% Propane, and 2.3% heating oil (Figure
9). These values reflect the high penetration rate of natural gas in Alberta‟s residential heating
market.
Unfortunately, financial incentives for residential geoexchange systems are not available
in Alberta or B.C., unlike in the rest of Canada where the average government funded incentive is
$9,000-$10,000.
With an estimated 856,000 single detached homes in Alberta, and assuming 100%
penetration, the retrofit market has the potential to generate an estimated $18.76 billion for closed
vertical systems and $18.9 billion for closed horizontal systems.
40
Figure 9 System Retrofits – Fuel Replaced (Alberta)
Source: Canadian GeoExchange Coalition 2010
Within Alberta the top heat pump brand had a 27.42% share of the market, and the top
three brands a 72.58% market share. The B.C. and Alberta pump markets are similar, with the
three top pump brands dominating the market. Although one pump brand dominated the B.C.
market with a 43.57% share, there was a higher penetration rate by firms ranked11 to 15
compared to a penetration rate of 0% for firms ranked 11 to 15 in Alberta (Table 11).
In Alberta, the top three geoexchange system installers captured 55.82% of the market
and the top installer captured 27.91% of the market (Table 11). In B.C. the top three installers
captured 29.35%.
Table 11 Market Share by Brand in Alberta and Installers Market Share in Alberta
Source: Canadian GeoExchange Coalition 2010
41
2.9.2 Geoexchange in Canada
There are an estimated 7,181,000 single detached homes in Canada (Canadian
GeoExchange Coalition2010). The single-dwelling retrofit market with an average system install
of $25,000 and 100% market penetration has the potential to generate an estimated $179.5 billion
(Table 12).
Table 12 Estimated Potential Market Value of Residential Retrofit Geoexchange Systems in Canada*
Province Total
Revenue
Potential
**Open
Loop
Closed
Horizontal
Loop
Closed
Vertical
Loop
**Pond/Lake
Loop B.C. $13.7 billion $3.6 billion $11.3 billion $8.4 billion $579.6 million
Alberta $39.67 billion $1.5 billion $18.9 billion $18.76
billion
$498 million
Canada $179.5 billion $10.95
billion
$94 billion $61.2
billion
$9.2 billion
Source: Author 2011
*Assumes 100% market penetration and **Average installation cost of $25,000.
Pond/lake requires planning permission for non-lake/pond owners. Direct installations in Canada
are valued at $4.15 billion. In 2009, Canadian sales of residential geoexchange systems had
reached $220 million with accelerated growth between 2007 and 2008 that leveled off in 2009
(Figure 10). GHG savings are also understood to be significant (Table 13).
Figure 10 Total Sales – Residential Geothermal Heat Pump Systems in Canada
Source: Canadian GeoExchange Coalition 2010
42
Table 13 GHG Savings Potential across Canada
Source: Canadian GeoExchange Coalition 2010
2.9.3 Renewable Energy in Alberta
Alberta‟s electricity power generation, transmission, and retail distribution is
municipality and privately owned. Therefore, the potential for greater IPP involvement exists
when compared to a B.C. energy market monopolized by BC Hydro. In Alberta, coal is the top
source of electrical power generation (Figure 11). The increased demand for renewable energy is
a result of the government‟s environmental agenda and changes in industry best practice. The
proliferation of IPPs to satisfy the demand for renewable energy power has provided
environmental consulting and engineering firms with opportunities to diversify their services to
meet market demands and remain competitive. Company Y has been successful in meeting such
demands through its wind power environmental impact assessment service in B.C. and should be
able to transfer that experience to the energy market in Alberta.
43
Figure 11 Electricity Generation by Source in Alberta
Source: Canadian GeoExchange Coalition 2010
2.9.4 The Carbon Offset Market
The Carbon Capture and Storage market potential is particularly high in the Canadian
provinces of Alberta (70.7 tons/inhabitant) and Saskatchewan (72.2 tons/inhabitant) where GHG
emissions per capita are significantly higher than the Canadian average of 22.7 tons per
inhabitant. The introduction of the Carbon Capture and Storage Amendment Act 2010 provides a
strong market opportunity for environmental consulting and engineering firms like Company Y.
In 2009, the global low carbon environmental goods and services sub-sector (LCEGS)
was valued at $4.5 billion across national markets. The global carbon offset market with an
annual growth rate of 176% was valued at $128 billion in 2008 (Figures 12 and 13). Both
markets offer opportunities for Company Y‟s carbon and energy efficiency service.
44
Figure 12 National Markets for LCEGS Sector
Source: ECO Canada 2010
Figure 13 Growth in the Global Carbon Offset Market
Source: ECO Canada 2010
45
In summary, a profound change in attitude across governments, businesses and
individuals worldwide, triggered by climate change, represents a tipping point for an
environmental sector with mature and growth market segments. The environmental industry is a
moderately attractive one in which environmental consulting firms diversify to meet
environmental market demands.
The demand for energy and heat efficiency, and climate change services is at a global,
national and provincial level. In Canada, the single-dwelling residential retrofit market for
geoexchange systems is valued at $179.5 billion with a 100% penetration rate, and the market is
moderately competitive. In Alberta, the top three geoexchange system installers captured 55.82%
of the market and the top installer captured 27.91% of the market. In B.C. the top three installers
captured 29.35% of the market. Unfortunately, financial incentives for residential geoexchange
systems are not available in Alberta or B.C., unlike in the rest of Canada where the average
government funded incentive is $9,000-$10,000. The absence of residential incentives in some
provinces is expected to slow buyer demand.
In 2008, the environmental consulting and other scientific and technical services industry
generated revenue of $4.2 billion, of which environmental consulting generated $1.64 billion, an
overall increase of 10.4% from 2007, and 32% of total revenue from all consulting services. In
2009, the global environmental services market was valued at $228.5 billion, and by 2014, its
predicted value is $276.4 billion (DataMonitor, 2010).
In 2009, the global low carbon environmental goods and services sub-sector (LCEGS)
was valued at $4.5 billion across national markets. The global carbon offset market with an
annual growth rate of 176% and valued at $128 billion in 2008 offers opportunities for firms like
Company Y willing to compete in this environmental sub-sector.
Company Y‟s existing client base in the resource heavy, carbon polluting industries like
mining, and oil and gas present the firm with opportunities to offer niche services that will
capture 100% of the value chain. Such a service would start with an environmental audit, site
assessment, or feasibility study.
46
3: INTERNAL ANALYSIS
This section examines the Renewable Energy division‟s geoexchange service and
Company Y‟s resources, strategies and financial performance in further detail.
3.1 Where Company Y’s Geoexchange Service Adds Value
3.1.1 Geoexchange Technology
Geoexchange is a relatively new, commercialized heat and energy efficiency technology
that enables owners to use the ground‟s heating and cooling properties to heat and cool their
property efficiently while reducing GHG emissions. Geoexchange is also known as earth-
coupled, earth energy, water-source heat pumps or ground source heat pumps. A system is
comprised of three components: 1) a horizontal or vertical loop buried in the ground or in a
nearby lake or pond that circulates a refrigerant to exchange heat with the ground or water; 2) a
heat pump of three mechanical devices a compressor, a condenser and an evaporator, that moves
hot or cold fluid between the building and the earth via the loop. The heat pump easily integrates
with the building‟s existing distribution system; 3) the building‟s distribution system distributes
hot or cold air through the building. Geoexchange can also heat a property‟s water in isolation or
in combination with other heating and cooling sources like solar.
According to the average geoexchange company, high-efficiency geoexchange systems
are 48% more efficient than the most efficient gas furnaces and 75% more efficient than oil
furnaces. They also outperform gas technology by 36% in the heating mode, and 43% in the
cooling mode. Geoexchange systems lower electricity demand, for example, replacing every
district school conventional HVAC system over the next 10 years would produce an estimated
$11 billion in energy savings (Earthlinked, 2011). Geoexchange also reduces GHG emissions
with 650,000 installations being equivalent to removing 640,000 cars off the road and reducing
reliance on 14 million barrels of crude oil per year. System maintenance costs are lower even in
sub-arctic and arctic regions. Geoexchange systems are aesthetically superior, and less prone to
vandalism with no requirements for roof or landscape chillers, air handlers and other equipment.
47
3.1.2 The Renewable Energy Division’s Geoexchange Service
Company Y‟s Renewable Energy division is involved in the feasibility, design, and
testing phases of residential and commercial retrofit geoexchange projects. Company Y‟s client
is the property owner in single-dwelling residential projects; in District Heating Schemes the
project‟s developer; and, in new residential and commercial construction Company Y‟s client is
the residential property owner, or the commercial property developer. However, the division‟s
geoexchange service covers only a small portion of the energy supply chain (Figure 15).
Figure 15 Company Y’s Geoexchange Service in the Energy Supply Chain
Source: Author 2011
The property developer‟s primary client is usually a full-service building design firm or
the geoexchange system installer. Either type of firm has the internal expertise in the form of
CGC or LEED accredited resources that allow each firm to capture a larger percentage of total
project fees (Figure 16).
Figure 16 A Design and Build Project Roadmap
Source: Author 2011
The Renewable Energy division also provides a review and stamp service that fulfils a
municipality requirement for retrofit projects.
48
The fee structure for the Renewable Energy division‟s geoexchange services is:
1. District Heating Schemes generate a fee that is 5%-10% of the construction fee.
2. New construction either single or multiple dwelling residential or commercial generates a
fee that is 5%-10% of the construction fee.
3. System retrofits on single or multiple dwelling residential or commercial properties
generates a fee of $2,000 for 15 hours work over 2-3 days.
4. A stamp and review service to fulfil a municipality requirement for retrofit projects
generates a flat fee of $2,000.
The Renewable Energy division averages just five geoexchange projects per year.
Despite competing as a loss leader, the geoexchange service‟s growth rate is low with just one
additional project every two years since 2002.
The division‟s projects are split 20:40:40 across residential, institutional, and commercial
clients respectively. Since 2002, the project scope has increased and the division is involved in
feasibility, design and test phases on larger projects that include District Heating Schemes.
This project has identifed eight buyer segments (section 2.2.4), yet Company Y‟s fee
structure only comprises four segments. The divison has failed to adequately segment its market
and identify niche opportunities.
In Figure 17 below, in bold and italic, are the areas where value added services are
currently not provided by Company Y. The division could capture value across other project
phases with access to additional internal resources.
49
50
3.2 Company Y’s Resources
3.2.1 Human Resources
The firm operates with a divisionalized structure along three lines of business that report
directly into the CEO: 1) Corporate Services includes the support functions of Finance, HR,
Marketing and Communications, and Development 2) Planning and Management comprises
Ecology and Environmental Management 3) Environmental Sciences and Engineering comprises
Geomatics, Infomatics, Engineering, Renewable Energy, Hydrogeology, Site Assessment, and
Risk Assessment.
The firm has four office committees that support Health and Safety, the Environment,
Social activities, and Project Management. Six centres of excellence (COE) in Engineering,
Earth Sciences, Hydrogeology, Toxicology, Ecology and Planning also exist.
Company Y‟s divisionalized organization supports a general management function
comprised of business and client leaders from each line of business with responsibility for
resource management and executing business strategy that supports decentralized, informal
decision-making, more customer focus and understanding, and, resource coordination and
integration. However, if this general management team is weak, it can also create a series of
siloed teams whose focus is one output, one industry and one client. The CEO conveyed that the
firm‟s project management function is weak and that on occasions client leaders have been
unwilling to share their clients. These observations coupled with the current organizational
structure, suggests siloed resources. Although divisionalized organizations are adaptable, they
are prone to task duplication, resource inefficiencies, and fail to capture economies of scale and
scope.
A detailed analysis of the organization‟s structure is outside the scope of this project.
However, the firm should consider whether restructuring the organization as a hybrid matrix-
network would increase project and resource efficiency, time efficiency and adaptability. Any re-
structuring would only be successful if aligned with the organization‟s business strategies, and,
the appropriate supporting systems, people and culture were in place.
3.2.1.1 Corporate Services
Corporate Services is comprised of four support functions: 1) Finance is responsible for
financial reporting, invoicing and billing; 2) the human resources and corporate services function
51
is sub-divided into three divisions with: a) Human resources responsible for recruitment, training
and development, compensation, performance management, employee relations, internal
communications and human resources policies; b) Facilities and IT are responsible for the
management of Company Y facilities and IT across Company Y‟s four offices; c) Administration
is responsible for general administration across the organization; 3) Marketing and
Communications is responsible for internal and external marketing and communications, business
development, and sales proposals; 4) the Development division is responsible for acquiring new
business for the company.
3.2.1.2 The Environmental Sciences and Engineering Divisions
The Environmental Sciences and Engineering (ES&E) line of business comprises eight
divisions. Geomatics and Infomatics are responsible for computer-aided design (CAD) and
geographical information systems (GIS). Engineering, Hydrogeology, Site Assessments 1, 2 and
3, and Risk Assessment are responsible for contaminated land, site remediation and risk
assessment projects. The Environmental Sciences and Engineering line of business is supported
by client designated leaders and technical experts.
The Renewable Energy division is responsible for the feasibility, design and testing of
geoexchange systems in design and build projects. The division is also involved in the feasibility,
design and testing of projects with a solar power component.
3.2.1.3 The Planning and Management Divisions
The Planning and Management (P&M) line of business comprises five divisions.
Ecology 1 and 2, and Environmental Management 1, 2 and 3 are responsible for assessment in
environmental impact, ecology and socio-economics; and, First Nations strategy. The ES&E line
of business is supported by client designated leaders and technical experts.
The planning and management divisions engage in eight primary services:
1. Environmental impact assessment (EIA) that includes wind energy projects, airport
building construction, water treatment plants, mining, and transportation infrastructure
2. Strategic management advice on First Nations issues
3. Ecological assessment contributions to EIA projects; and,stand-alone ecological
assessment and management projects
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4. Socio-economic assessment contributions to EIA; and,stand-alone socio-economic
assessment and management projects
5. Aquatic sciences assessment contributions to EIA projects; and, stand-alone aquatic
assessment and management projects
6. First Nations consultation and training
7. Public consultation supporting EIA and stand-alone consultation projects
8. Energy and carbon management.
The environmental science and engineering divisions engage in six primary services:
1. Contaminated land - phase 1/2/3 environmental site assessment (ESA) and detailed site
investigation
2. Engineering and contaminated land remediation
3. Human health and ecological risk assessments
4. Hydrogeology assessments and modeling
5. Renewable energy, geoexchange, and solar hot water
6. Geomatics, AutoCAD, and Geographical Information Systems (GIS).
Two secondary services include:
7. Phase I ESAs, Due Diligence, Litigation Support
8. CSAP reviews.
3.2.2 Financial Resources
Company Y is a privately owned company and beyond general revenue performance
data, financial statement data was unavailable.
3.2.3 Physical Assets
Company Y rents office space in Vancouver, Burnaby, Victoria and Alberta. Company
Y owns its office equipment, and information technology hardware and software resources
partially outsourced to a Third Party provider support the firm‟s primary and secondary functions.
53
3.2.4 Technological Assets
Company Y does not own any technological assets.
3.2.5 Strategic Assets
Strategic assets are resources and capabilities that not only create a competitive
advantage, are also unique, sustainable and transferable across the firm, in other markets or in
other countries (replicable). A sustainable competitive advantage results from unique firm
specific resources and capabilities applied to well-defined activities in ways that are difficult to
imitate and immune to appropriation by others (Boardman, Shapiro, and Vining, 2004).
Company Y‟s competitive advantage is price, a competitive advantage that is easy to
imitate and therefore, unsustainable. Company Y‟s consultants that “go the extra mile to meet
client needs without charge” are Company Y‟s strategic assets. Although, Company Y‟s
competitive advantage is unsustainable, its consultants are unique, transferable across the firm,
other markets and countries, but they are only strategic assets if they can also help the firm to
leverage its competitive advantage to grow. Company Y could gain a strategic competitive
advantage by using strategic assets to create differentiated products and services that are not price
sensitive. Company Y can only increase its profit margin by increasing client willingness to pay
and decreasing operating costs.
3.3 Company Y’s Current Strategies
3.3.1 Current Corporate Strategy
Company Y has grown its employee numbers at an average annual rate of 46% over the
past 10 years to reach and then surpass a target employee headcount of 140 (Figure 18). Such a
people-focused strategy risks incurring high overhead costs. With a current average billable rate
of 70% per employee, 18 unbillable staff, and for the past three years, a failure to meet the firm‟s
strategic goal of a 13% profit margin, this strategy may be unsustainable.
Company Y‟s services in B.C. and Alberta help both public and private sector clients
meet their environmental obligations under federal, provincial and municipal government
legislation, regulations and programs, as well as meet industry standards, regulations and best
practice. Each line of business offers a broad range of vertically integrated services and positions
itself as a cost leader. The company has grown organically through a combination of service
54
development and market penetration, but has also diversified into new environmental sectors that
include heat savings and energy efficiency with its geoexchange, and energy and carbon services.
Figure 18 Company Y’s Headcount Growth
Source: Company Y 2011
3.3.2 Services and Customers (Positioning Strategy)
Company Y is a service-oriented firm that sells a few services to many different customer
segments. As markets mature, a new service will cycle through diversification, market
development, and market penetration. Company Y‟s geoexchange service was originally a
diversified offering that has now cycled through to market penetration (Figure 19).
Figure 19 Company Y’s Positioning Strategy
55
3.3.3 Competitive Strategy
Industry incumbents are involved in competitive bidding with public sector contracts
usually awarded to the lowest priced bidder.. However, within the private sector, the bidder with
solid technical experience and a fair price wins the contract. Incumbents can compete by
differentiating their service. Company Y‟s geoexchange service competes as a cost leader
although ideally the division should adopt a differentiation or focus strategy to increase the
division‟s revenue (Figure 20).
Figure 20 Company Y’s Competitive Strategy
3.3.4 Functional Strategy
Company Y is the primary contractor on the majority of its projects. However, on
geoexchange projects, Company Y‟s Renewable Energy division is a sub-contractor to the
primary contractor, a role that captures only a small percentage of total available project revenue.
Typically, the geoexchange system installer is a sub-contractor of the Renewable Energy division
or the primary contractor. Ideally, if Company Y had sufficient internal resources it would
consistently be the primary contractor and the project manager on both large-scale and small-
scale projects, a role that would allow the firm to capture a higher percentage of total project
revenue.
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3.3.5 Strategic Fit
Although Company Y‟s current corporate strategy, positioning, competitive stance and
functional strategies reinforce one another through alignment, there are opportunities for the firm
and the Renewable Energy division to increase revenues by changing their business strategies.
Instead of competing as a cost leader, the division should compete with a differentiated focus
strategy to drive up its revenues.
3.3.6 Corporate Social Responsibility
The goal of any company is to create shareholder value in a socially responsible manner.
Being socially responsible means that an individual or firm while maximizing economic profit
within the rules of the game, and without deception or fraud does not contribute to a socially
inefficient outcome in which social cost is not equal to social benefit (Friedman, 1970). Firms
that earn economic profits consistently over time have a sustainable (economic, social and
environment) competitive advantage.
Firms that introduce corporate social responsibility (CSR) into their business model are
proactive about their responsibilities to non-shareholder stakeholders that include the
environment, suppliers, employees and community. Sustainable management considers its
impact on the environment and on society in general, while maintaining financial profitability
(Nguyen and Slater, 2010). Sustainability is one of Company Y‟s core values, and the firm has
made a commitment to report, using the G3 Guidelines of the Global Initiative (GRI), on an
annual basis the firm‟s performance in each of the areas of economics, environment, employee
commuting, consumables, electronic waste disposal, solid waste management, labour and
community.
Introducing CSR into a firm‟s business model has the potential to increase revenue using
a favourable CSR reputation to attract clients, and increase profits through process improvements
that decrease a firm‟s costs. However, a firm that introduces CSR also increases its transaction
costs and risks creating a backroom and front room that needs to be controlled. Indeed, Company
Y already has one: Gender Distribution. Although 51% of employees are female, only 17.7% are
in the management group, a level significantly below that required to substantiate Company Y‟s
CSR statement that its gender distribution is balanced.
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3.4 An Analysis of Financial Performance
3.4.1 The Renewable Energy Division’s Geoexchange Service
The Renewable Energy division‟s financial performance in 2010 illustrates that three
employees failed to meet their billable target rates. Two employees, Director 1, and Senior -
employee 2 were below their target billable rates of 60% and 70% respectively, and each incurred
an operating loss. Mid-employee 3 was below his/her target billable rate of 70%, but incurred an
operating profit. Mid-employee 1 was above his/her target billable rate of 70%, but incurred an
operating loss. Despite the division‟s underperformance, its operating profit was $132,500 (Table
14).
Table 14 The Renewable Energy Division’s Financial Performance 2010*
Employee Position
Total Revenue/Year
($)
Total Operating Cost/Year includes training ($)
Gross Operating Profit
(Loss)
($)
Target Chargeout
Rate/Hr ($) versus est. Actual Average Chargeout Rate/Hour ($)
Billable Project Hrs/Yr (1950 hrs/year)
Director 1 96k 104k (8k) 140-190 vs 106
46.38%
(60% target)
Mid Employee 1
73k 74k (1k) 115 vs 49 77%
(70% target)
Mid Employee 2
128.5k 67k 61.5k 100 vs 83 79.6%
(70% target)
Mid Employee 3
92k 78k 14k 95 vs 71 66.7%
(70% target)
Junior Employee 1
104k 53k 51k 90 vs 68 79%
(70% target)
Senior Employee 1
115k 92k 23k 135 vs 82 72.4%
(70% target)
Senior Employee 2
65k 73k (8k) 120 vs 83 40%
(70% target)
Totals 673.5k 541k 132.5k
Source: Author 2011 using data sourced from Company Y 201. *Shaded areas illustrate
underperformance.
58
In 2010, employee chargeout rates across the division were between $66/hr and $17/hr
below target chargeout rates. Although the division competes as a cost leader, and chargeout
rates are deliberately low, by adopting such a strategy the division risks incurring future operating
losses.
Although the division compete as a cost leader, low chargeout rates coupled with below
target billable rates, signify a low demand for the Renewable Energy division‟s services. The
division‟s market penetration rate is low.
This low demand is also apparent in 2011 year to date March 2011 performance data.
The Renewable Energy division‟s revenue from all project types is $71,400, labour costs are
$52,000, and total operating costs extrapolated from 2010 are $129,519. Therefore, other
operating costs are $77,519. In conclusion, the Renewable Energy division‟s March 2011 year to
date operating loss is $58,119.
3.4.2 Company Y’s Financial Performance
Company Y is a people- focused and values-based firm of 150 employees. The firm has
failed to meet its strategic goal of 13% annual profit margin for the past three years (Figure 21).
Figure 21 Company Y’s Revenue versus Profit Margin 2008-2010
Source: Author 2011 using data sourced from Company Y
59
In 2010, the P&M line of business‟s gross margin was 27.42% with 39 staff and an
average billable rate of 72%. The ES&E line of business gross margin was 12.5% with 75 staff
and an average billable rate of 69%. Corporate services accounted for 18 unbillable staff (Table
15).
If productivity is fees per of staff, within the ES&E line of business the average 2010
productivity level was $128,000. Within the P&M line of business, the average 2010
productivity level was $158,974. The average rate across both lines of business for all staff was
$162,280 in 2010 with 114 staff, and $185,417 in 2009 with 96 staff. These results indicate that
the addition of staff to the firm‟s P&M and ES&E lines of business decreased the firm‟s average
productivity levels between 2009 and 2010 (Table 15).
Table 15 Company Y’s P&M, ES&E, and Renewable Energy Division Performance 2010
Line of
Business/Division
Gross
Margin
# Staff Average
Billable Rate
(Target is
70%)
Average
Productivity =
Fees/# Staff
P&M 27.42% 39 72% $158,974
ES&E 12.5% 75 69% $128,000
Renewable Energy 19.67% 7 65.9% $96, 214
Source: Author 2011 using data sourced from Company Y
The P&M line of business outperforms the ES&E line of business, and the Renewable
Energy division across all financial performance measures while exceeding the firm‟s targets.
Although the Renewable Energy division‟s gross margin of 19.67% is higher than the other
ES&E divisions combined, the average billable rate and productivity are lower than either P&M
or ES&E.
In summary, the Renewable Energy division competes in the heat savings and energy
efficiency sector, which is a growth environmental sub-sector. Despite this, the division‟s 2010
performance raises several concerns. Although the division recorded a gross margin of 19.67%,
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it failed to meet performance targets in billable rates. The firm also underperformed against the
P&M and ES&E lines of business on productivity per employee.
The Renewable Energy division competes as a cost leader, but a low buyer demand
indicates that the division is now at risk of continuing to incur additional operating losses. Year
to date figures for March 2011 indicate that the Renewable Energy division‟s operating loss is
$58,119.
Although Company Y‟s current corporate strategy, positioning, competitive stance and
functional strategies reinforce one another through alignment, there are opportunities for the firm
and the Renewable Energy division to increase revenues by changing the firm‟s strategies.
Instead of competing as a cost leader, the firm and the division should consider
competing with a differentiated focus strategy to drive up firm revenue. However, Company Y
can only increase its profit margin by increasing client willingness to pay and decreasing
operating costs.
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4: COMPANY Y: AN ASSESSMENT OF THE PRESENT
SITUATION
The environmental consulting industry is moderately attractive, competitive and highly
dependent on federal, provincial and municipal government policy, regulation, legislation and
programs to drive it. Client industry standards, regulations and best practice also influence the
sector. A series of government and industry level initiatives currently drive demand for green
environmental goods and services, the sector‟s strongest economic growth area.
Company Y is a full-service environmental and engineering consultancy cost leader with
a client base in British Columbia and Alberta. Renewable energy, heat savings and energy
efficiency initiatives that reduce GHG emissions and climate change impact are industry growth
areas. Despite this, Company Y‟s Renewable Energy division operates at a loss. The firms‟s
CEO, concerned about the division‟s revenue, has questioned its future profitability in the
renewable energy market.
The Renewable Energy division offers a geoexchange service of feasibility, design and
testing that captures only 5%-10% of project revenue. The division is not only constrained by
internal resources, it competes in an environmental growth sector against experienced, full-
service and specialized incumbents. The Renewable Energy division‟s geoexchange service has
diversified Company Y away from its core competencies in EIA and ESA. To build the service
to a level that captures a significant proportion of geoexchange project revenue would require a
significant investment.
In 2010, the Canadian GeoExchange Coalition valued geoexchange residential retrofit
sales in Canada at $220 million, and with a potential single-dwelling residential retrofit market of
$179.5 billion (based on 100% market penetration); geoexchange is an attractive and lucrative
market.
However, the average residential geoexchange system retrofit costs $25,000 and with
future electrical rate increases planned, particularly in B.C, residential property owners are
reluctant to invest in a geoexchange system if higher electrical rates negate potential operating
cost savings. In B.C. and Alberta, no residential financial assistance is available. BC Hydro has
chosen not to promote or incentivize single or multiple-dwelling residential retrofit and new
62
residential construction projects because the technology fails BC Hydro‟s total resource cost test
parameters of conservation and demand management. In contrast, financial incentives are
available under the ecoEnergy Retrofit Homes program managed by Natural Resources Canada.
Residential owners in Ontario, Quebec, Saskatchewan and Manitoba receive up to 40% of
geoexchange costs.
Although the residential Canadian geoexchange market has grown 40% annually in 2004
and 2005, 60% in 2006, 2007 and 2008, and 65% in 2009, a rise that correlates with increased
fossil fuel costs, conflicting reports about the energy efficiency, GHG benefits, and potential
environmental impacts of geoexchange systems have contributed to buyer uncertainty (Canadian
GeoExchange Coalition, 2010).
Currently underway is a project cosponsored by BC Hydro, Fortis Energy BC, the City of
Vancouver and Natural Resources Canada that evaluates the claimed energy efficiencies, and
GHG reductions set out by the Canadian GeoExchange Coalition in several of their publications.
Project manager GeoExchange BC‟s conclusions should provide future direction to the
geoexchange industry in Canada. Until the report‟s publication in May 2011, BC Hydro provide
sole indirect sponsorship to geoexchange projects for the Institutional, Commercial and Industrial
(ICI) sector through their High Performance Building program; and, Natural Resources Canada
support residential geoexchange through their ecoEnergy program. In conclusion, without BC
Hydro‟s support the residential single-dwelling retrofit and new construction market in B.C. is
unlikely to grow. Therefore, the future direction of the geoexchange market in Canada is
uncertain until the publication of the Phase I project report findings.
Environmental Consulting and Engineering firms who maintain an impartial stance are
highly regarded in the industry. However, two senior employees of Company Y‟s Renewable
Energy division sit on GeoExchange BC‟s Board of Directors. Company Y excluded from the
project selection phase of the BC Hydro Phase I Energy Performance Evaluation project because
of this conflict of interest, lost an opportunity to one of its primary competitors, to gain invaluable
geoexchange project experience. In addition, new or existing clients seeking impartial
environmental advice may believe their quality of service compromised and question Company
Y‟s integrity. Integrity and accountability are Company Y‟s core values, and so this conflict of
interest may continue to lead to both internal and external repercussions for Company Y.
Maintaining the status quo of the Renewable Energy division‟s geoexchange service is
likely to lead to continued losses for the division in 2011 while the conflict of interest described
earlier could, over the long-term, harm Company Y‟s brand and damage other revenue streams.
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Figure 22 illustrates Company Y‟s dilemma. The division‟s geoexchange service occupies the
low market growth and relative low market share or the „dog‟ quadrant of the Boston Consulting
Group‟s (BCG) growth share matrix. Although the heat savings and energy efficiency market is a
growth one, with an uncertain geoexchange market, and buyer reluctance, the growth rate is
likely to decline over the next three years within the residential sector, with only some growth
expected in the ICI sector. These external factors combined are likely to lower this
environmental sector‟s growth rate and may push the sector into decline.
Company Y‟s geoexchange service has diversified the firm to compete in an
environmental sub-sector sector that is beyond the firm‟s core competencies and positions
Company Y‟s renewable energy division as a cost leader in a highly competitive market space
occupied by experienced incumbents.
Although the Renewable Energy division competes as a cost leader, a low buyer demand
for its services, and a low productivity rate per employee, illustrates that the division faces
significant challenges. Year to date figures for March 2011 show that the Renewable Energy
division‟s revenue is $71,400, labour costs are $52,000 and other operating costs are $77,519,
which means that the Renewable Energy division‟s current 2011 year to date operating loss is
$58,119.
Company Y‟s current corporate strategy, positioning, competitive stance and functional
strategies reinforce one another through alignment, but there are opportunities for the firm and the
Renewable Energy division to increase revenues by changing strategy. Instead of competing as a
cost leader, the division should consider competing with a differentiated focus strategy to drive
up firm revenue. However, Company Y can only increase its profit margin by increasing client
willingness to pay and decreasing operating costs.
In conclusion, Company Y should change its corporate and business level strategies if it
wishes to improve performance and remain profitable. Maintaining the status quo will ensure
that profit margins continue to be significantly below target, and that the Renewable Energy
division will continue to underperform, and operate at a loss.
Moving ahead, Company Y should respond to the demands of the environmental sector‟s
growth areas of carbon and climate change mitigation, heat and energy efficiency, green
buildings, and, renewable energy resource management. The firm should position itself to serve
niche market growth areas derived from the firm‟s core and complementary services in
remediation, EIA and ESA. Company Y should target potential buyers that fall under specific
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market segments (2.2.4). Such buyers are likely to operate in heavily regulated industry sectors
like oil and gas, or wish to improve their CSR. Diversifying into a strongly competitive
geoexchange market has proven to be a significant challenge, and the division currently operates
at a loss.
Company Y‟s competitors pose a significant threat to the firm not only in the heat and
energy efficiency sector, but also in the firm‟s core offerings of EIA, ESA and remediation. It is
critical that Company Y positions itself with the right corporate and business level strategies to
remain competitive and to ensure that the firm‟s services are in the „Star‟ and „??‟ quadrants
(Figure 22).
Therefore, as a starting point, Company Y should decide whether to: 1) divest or invest in
the Renewable Energy‟s geoexchange service 2) release underperforming employees from the
Renewable Energy division 3) conduct a review of each division‟s financial performance to
identify and analyze areas of underperformance. Divesting or downsizing just one division will
not resolve Company Y‟s other performance and profitability issues over the long-term. In
conclusion, the firm needs to plan and execute a strategy for change that will improve the firm‟s
performance, profitability and secure a sustainable competitive advantage for each service.
Figure 22 Company Y’s Future Direction – Boston Consulting Group Growth Share Matrix, 1970
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5: STRATEGIC OPPORTUNITIES AVAILABLE TO
COMPANY Y
Canadian-owned environmental consulting and engineering firms like Company Y
compete as cost leaders in a monopolistically competitive market strongly influenced by
government policy, economic factors and industry best practice. Larger, multi-national firms and
smaller niche players all vie for a share of the environmental sector‟s growth areas collectively
known as the green economy. This trend leaves Company Y with several revenue growth
challenges and some difficult strategic choices to make.
Competing solely on low price is an unsustainable option that lowers profit margins for
all firms. To remain competitive, Company Y needs to be more aggressive in setting and
achieving its corporate strategic goal and business objectives. Although competing on service
differentiation is not an option on public sector bids, the firm could adopt a differentiated focus
strategy on private sector bids.
Company Y‟s Renewable Energy division‟s geoexchange service has diversified the firm
away from its core competencies. This growth strategy has failed to meet target expectations for
a Renewable Energy division that competes as a cost leader in a heat and energy efficiency
environmental sub-sector growth market against experienced incumbents. The division currently
operates at a loss.
Maintaining the status quo puts the firm at risk of becoming unprofitable, unresponsive,
inefficient, inflexible, and unsustainable.
Therefore, section 5.1 presents several strategic alternatives to the status quo.
5.1 Strategic Alternatives
5.1.1 Strategy #1: Maintain the Status Quo
In 2010, the Renewable Energy division failed to meet target expectations on billable rate
and employee productivity despite a gross margin of 19.7%. The division‟s 2011 year to date
revenue is $71,400, operating costs are $129, 519 and so the division is operating at a loss of
$58,119.
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Additionally, Company Y‟s Renewable Energy director and a senior employee were in a
conflict of interest position that restricted the firm‟s participation in BC Hydro‟s Phase I
geoexchange project. Therefore, new or existing clients seeking impartial environmental advice
may believe their quality of service compromised, and question Company Y‟s integrity. This
conflict of interest could have wider and longer-term implications for Company Y.
Maintaining the status quo will ensure that the division continues to underperform.
5.1.2 Strategy #2: Expand the Renewable Energy Division’s Capabilities Accompanied by
an Expansion into Niche Markets
Company Y lacks the necessary CGC accreditation, and project experience to provide a
full-service specialized geoexchange service that enables the firm to capture the build project
phase or installation. The addition of a CGC accredited employee and attaining CGC firm
certification would increase the division‟s likelihood of capturing revenue on this phase of the
project.
Company Y also lacks in-house LEED accredited resources to provide a LEED green
building design service that would allow the firm to capture the feasibility, plan, design, build and
test project phases on a green building project with heat and energy efficiency, including
geoexchange and solar components. The recruitment of experienced LEED-accredited resources
would increase the division‟s likelihood of being awarded a green building project that has a
wider scope, including single-dwelling, and multiple-dwelling residential, ICI and District
Heating Schemes.
Competing as a cost leader has proven to be an unsuccessful strategy for the Renewable
Energy division. The division should consider competing with a differentiated focus strategy to
drive up revenue in niche markets. However, Company Y can only increase its profit margin by
increasing client willingness to pay and decreasing operating costs.
5.1.3 Strategy #3: Cease the Renewable Energy Division’s Geoexchange Service
Since 2002, the division on average added just one project every one or two years, and in
2010, completed work on five geoexchange projects. The division also underperformed on
billable rates and productivity, and is currently operating at a loss of $58, 119.
Ceasing the division‟s geoexchange service would free-up internal resources for re-
allocation to other divisions or when re-allocation is not possible or is unproductive would reduce
the firm‟s headcount and annual labour costs.
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5.1.4 Strategy # 4: Downsize the Renewable Energy Division and Company Y’s
Unbillable Resources
In 2010, three out of seven Renewable Energy division employees failed to meet their
billable rate performance targets. The division was also the least productive across the ES&E
divisions combined, and the P&M line of business. Although the division competes as a cost
leader, low chargeout rates coupled with below target billable rates, signify a low demand for the
Renewable Energy division‟s services. The division‟s cost leadership stance has failed to
penetrate the market.
Corporate Services consists of 18 unbillable employees and the firm should consider
reducing the number of unbillable employees, and underperforming employees across other
divisions to minimize the firm‟s annual labour costs.
5.1.5 Strategy # 5: Expand the Geoexchange Service by Acquisition or Partnership
Company Y could expand its Renewable Energy division through partnerships with firms
that capture just the build phase of a geoexchange project, such as the geoexchange installer, or a
full-service geoexchange firm or firms that capture a relatively high share of the green building
market, such as LEED architects and planners.
Company Y could expand by acquiring a CGC-certified company that has a solid client
base and is experienced across the full geoexchange value chain. An acquisition would also
increase Company Y‟s market share and client base, and offer a window of opportunity into other
industry sectors that wish to increase their environmental compliance.
Alternatively, Company Y could acquire a small, reputable firm of LEED accredited
architects and planners. Such an acquisition would add a LEED green building design service to
Company Y‟s portfolio and instantly increase the firm‟s market share and client base.
5.2 Possible Future Scenarios
5.2.1 Worst-Case Scenario
The worst-case scenario for Company Y is a heating and energy efficiency sector that
prefers no environmental consultant involvement across any of the bid, feasibility, plan, design,
build, test and monitor phases of geoexchange retrofit and new construction projects.
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This scenario is most likely to happen with a buyer who has no environmental obligations
associated with a project or would prefer to use a non-environmental consulting firm. Typically,
the project type would be a single-dwelling retrofit or new construction with a full-service
geoexchange specialist firm as the sole service provider. On larger projects such as a multiple-
dwelling or ICI retrofit or new construction or District Heating, the full-service building design
firm is the primary service provider, and geoexchange is just one component in a green building
project.
5.2.2 Best-Case Scenario
The best-case scenario for Company Y is a heating and energy efficiency sector that
prefers the environmental consultants to be the primary supplier on bid, feasibility, plan, design,
build, test, and monitor phases of geoexchange retrofit and new construction projects.
On single-dwelling retrofit and new construction projects, the environmental consultant
would also be the project manager and responsible for all project phases. The project manager
sub-contracts some or all of the project phases to a full-service geoexchange specialist.
This scenario is most likely to happen with a) a buyer who must comply with their
environmental obligations, or b) who wishes to go beyond the regulatory framework, or c) is
voluntarily compliant, or d) with deep pockets.
On multiple-dwelling and ICI retrofit or new construction or District Heating Scheme
projects the environmental consultant, as the project manager, would sub-contract some or all of
the project work to a full-service building design firm.
5.2.3 Most Likely Scenario
The most-likely case scenario for Company Y is a heating and energy efficiency sector
that prefers the environmental consultants to be the primary supplier on two or three components
of the bid, feasibility, plan, design, build, test, and monitor phases of small retrofit and new
construction projects. These phases are most likely to be feasibility and testing. On larger
projects such as a multiple-dwelling or ICI retrofit or new construction or District Heating, the
environmental consultants may be involved in the feasibility and testing phases, but the majority
of the project work is split between the full-service building design firm and the geoexchange
installer, especially on green building projects.
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5.3 Evaluation Criteria Based on Company Y’s Critical Success
Factors
Company Y‟s weighted goals were derived from company documents, and conversations
held with the firm‟s CEO, and used to evaluate the strategic alternatives identified in section 5.1
(Table 16).
5.3.1 Current Mission, Vision and Values
Company Y‟s mission is to create opportunities for clients, and its employees. Company
Y‟s vision is to be the employer of choice for employees of choice.
„The Company Y Way‟ is the company‟s mantra, a “secret sauce” and an extended
version of the firm‟s value statement. The company believes that working the „Company Y Way‟
of people-based, business-focused, values-driven and performance excellence gives them a
competitive advantage. Their way is the “secret sauce” of who the organization is, and
employees must embrace and live by it.
5.3.2 Critical Success Factors
Company Y‟s critical success factors or goals are:
Client Relations: Proactively working together and striving to understand different
perspectives by being respectful of the firm‟s clients and employees.
Leadership: Clear and accountable, acknowledging the trust that clients and
employee teams have to deliver the right solutions.
Expertise: Demonstrating expertise through technical excellence and continuous
improvement; being innovative.
People: Allocating resources in a timely manner ensuring the right people are in the
right roles at the right time.
Profitability: Delivering on client commitments and ensuring sustainable financial
health.
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Table 16 Company Y’s Weighted Goals
Goal Short Term Long Term Average Weight
Client Relations 20% 25% 22.5%
Leadership 20% 25% 22.5%
Expertise 20% 20% 20%
People 25% 10% 17.5%
Profitability 15% 20% 17.5%
Adapted from Company Y 2011
Company Y‟s values where appropriate, applied to the strategic alternatives and scenario
analysis (Sections 5.4, 5.5. and 5.6) include:
Respect: Working together and understanding different perspectives and needs –
across clients, partners and employees.
Integrity: Always deliver on Company Y commitments.
Accountability: Company Y holds itself accountable, and acknowledges the trust
that clients and its employees have placed in the firm to deliver the right solutions.
Sustainability: Strive for solutions that address client needs, business objectives and
principles of sustainability (economic, social and environment).
Innovation: Identifying better ways to do things and strive for continual
improvement.
Responsiveness: Opportunity focused quick to react, and eager to support Company
Y‟s teams and their clients.
Adaptability: Responding to changing economic and regulatory conditions that
impact Company Y‟s clients and industry.
Company Y also believes that its growth is constrained by a combination of finances,
finding the right people with the right skills to lead the firm into new sectors, and
underperforming employees.
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5.4 Analysis of Strategic Alternatives
5.4.1 Analysis of Strategy #1: Maintain the Status Quo
In 2010, despite a gross margin of 19.7%, the division underperformed on target billable
rates with three employees below their target rates; and, the division‟s productivity level was less
than the firm‟s P&M line of business, and other ES&E divisions combined.
The Renewable Energy division‟s year to date 2011 operating loss is $58,119. Although
the division competes as a cost leader, a low buyer demand indicates that the division is now at
risk of continuing to incur additional operating losses through 2011. Such operating losses will
influence Company Y‟s ability to meet its strategic goal of a 13% profit margin.
Company Y has a reputation for giving impartial advice. Although the Renewable
Energy division‟s conflict of interest does not violate any of the firm‟s core values, it could have
wider and longer-term implications for Company Y. Despite the firm‟s promise to be
accountable for delivering the rights solutions, new or existing clients seeking impartial
environmental advice may believe their quality of service compromised, and given the division‟s
degree of focus on geoexchange, question the firm‟s integrity.
In conclusion, maintaining the status quo is not a viable short or long-term strategy for
the Renewable Energy division.
5.4.2 Analysis of Strategy #2: Expand the Renewable Energy Division’s Capabilities
Accompanied by an Expansion into Niche Markets
Assuming that sufficient internal capabilities now exist, Company Y would be able to
offer full-service geoexchange and/or LEED green building design service where geoexchange
would be just one of several heat and energy efficiency options.
The division‟s expanded services would exist as a stand-alone offering, or be vertically
integrated with Company Y‟s contaminated land site assessment, remediation, or energy and
carbon services, on new construction or existing property projects.
This resource expansion accompanied by a departure from a cost leadership to a
differentiated focus strategy would increase the division‟s revenue, but may increase operating
costs in the short-term with the absence of scale economies.
An expanded Renewable Energy division would be capable of competing against
experienced incumbents in the green building sector. However, a slow economic recovery, near
72
zero growth in the construction industry, and an uncertain geoexchange market means that
external factors will influence the Renewable Energy division‟s ability to increase its revenue
through 2011 and 2012.
Adopting an expansion and a differentiated focus strategy would improve the division‟s
likelihood of contributing to Company Y‟s expertise and profitability goals. However, the
division still needs to adapt to an uncertain market while offering innovative niche solutions.
5.4.3 Analysis of Strategy #3: Cease the Renewable Energy Division’s Geoexchange
Service
In 2010, the Renewable Energy division underperformed on its billable rate and
productivity targets. Year to date operating losses are currently at $58,119.
In Canada, the single-dwelling residential geoexchange is a growth market that is valued
at $179.5 billion, but accounts for only 20% of the division‟s current revenue. Residential buyer
reliance on government financial incentives for retrofit geoexchange, such as those provided
through the ecoEnergy program, offer a short-term window of opportunity for the Renewable
Energy division, but only in markets outside of B.C. and Alberta.
Although the ICI sector in B.C. supported by key energy and government stakeholders
through BC Hydro‟s High Performance Building program accounts for 80% of the Renewable
Energy division‟s current project load, until the publication of the BC Hydro – GeoExchange BC
Phase I report in May 2011, the future of the Canadian geoexchange market remains uncertain.
In addition, a slow economic recovery, near zero growth in the construction industry, and
an uncertain geoexchange market means that external factors will influence the Renewable
Energy‟s ability to increase its revenue through 2011.
Therefore, ceasing the division‟s geoexchange service would free-up internal resources
for re-allocation to other divisions or when re-allocation is not possible or is unprofitable would
reduce the firm‟s headcount and annual labour costs by approximately $270,400. Such a strategy
would contribute to Company Y‟s profitability goal.
5.4.4 Analysis of Strategy # 4: Downsize the Renewable Energy Division and Company
Y’s Unbillable Resources
The Renewable Energy division, if downsized to two or three employees, would provide
Company Y with a small presence in the heat and energy efficiency market. A downsized, re-
positioned division would provide Company Y with a small, but profitable and important
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presence in the heat and energy efficiency market. Reducing the headcount of underperforming
employees where re-allocation was not possible or productive would reduce the firm‟s annual
labour costs by approximately $120,000. A re-brand combined with a niche marketing strategy
would increase the division‟s market penetration rate, and increase revenue and operating profit.
The division still has to compete against experienced and reputable incumbents with
limited internal resources, and within an uncertain geoexchange market. Therefore, retained
employees must have the appropriate skills to work on both geoexchange projects and other
services provided by Company Y to ensure they are sufficiently experienced to contribute to the
firm‟s performance objectives.
Adopting a downsizing strategy would require strong leadership skills to either relocate
or let go underperforming employees. Such tactics are necessary to improve the division‟s
performance, and to increase the division‟s profit margin, and its growth rate. A downsizing
strategy is likely to be an unwelcome challenge for many employees, but a strong strategy
executed well will improve employee performance in those able to adapt to internal change.
Additionally, downsizing the number of unbillable resources in Corporate Services and
other divisional underperforming employees would significantly reduce Company Y‟s annual
labour costs.
5.4.5 Analysis of Strategy # 5: Expand by Acquisition or Partnership
Current partnerships are limited to geoexchange installers and developers, but do not
include architects or planners. Complementary partnerships would increase the Renewable
Energy division‟s market exposure, and lead to a higher volume of project work. Historically,
pre-partnership expectations prove elusive and the partnership fails. Company Y must be
prudent and select the right partner to ensure that pre-partner expectations were compatible and
realistic. The partnership must be profitable and productive for both parties.
The acquisition of a CGC-certified company would increase Company Y‟s market share
and client base instantly, and offer a window of opportunity into other industry sectors that wish
to increase their environmental compliance.
Alternatively, the acquisition of a small, reputable firm of LEED accredited architects
and planners would add a LEED green building design service to Company Y‟s portfolio and
increase the firm‟s market share and client base instantly. A LEED green building design service
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would stand-alone, or vertically integrate with the firm‟s contaminated land site assessment,
remediation, or energy and carbon services.
Historically unless well managed, acquisitions rarely meet pre-acquisition expectations,
and although the acquiring firm instantly increases its market share, profitability may decrease
because resource duplication causes operating costs to increase, and productivity levels to
decrease over the short-term.
After the division has acquired a LEED building design service, it would still compete
against experienced and reputable incumbents. However, with suitably qualified internal
resources, and an expanded client base, the division would be in a significantly stronger position
to penetrate the green building sector, and move away from its over-reliance on geoexchange.
The green building sector is an environmental growth sub-sector in which construction
industry standards adapt to climate change and natural disasters. A slow economic recovery
coupled with near zero growth in the construction industry, means that external factors will
influence the division‟s ability to increase its revenue through 2011 and 2012.
However, adopting an acquisition strategy would increase the division‟s expertise, while
providing employees with an opportunity to increase their green building experience. It also
shows that Company Y is adaptable to changing economic and regulatory conditions.
5.5 Company Y’s Goals and Valuation
In Table 17 below, Company Y‟s goals assessed against the strategic alternatives
identifies the likelihood of Company Y achieving its goals in the short-term and long-term.
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Table 17 Company Y’s Goal Predictions
Strategic Alternative
Goal Status Quo
(ST/LT)
Expand
Capability &
Niche Market
(ST/LT)
Cease
(ST/LT)
Downsize
(ST/LT)
Expand by
Partnership
or
Acquisition
(ST/LT)
Client
Relations
Medium/
Low
Medium/Medium-
High
Low/Low Low-
Medium/
Medium-
High
Medium/
Medium-
High
Leadership Medium/
Low
Medium/
Medium-High
Low/Low Medium/
Medium-
High
Medium/
Medium-
High
Expertise Medium/Low Medium-
High/Medium-
High
Low/Low Medium-
High/Medium
High/
Medium-
High
People Medium/Medium Medium-
High/Medium
Low/
Medium
Low-
Medium/
Medium
Medium/
Medium-
High
Profitability Low/Low Low-
Medium/Medium-
High
Medium-
High/Medium
Medium-
High/
Medium
Medium
/Medium-
High
Based upon Boardman, Shapiro and Vining 2004
Key: Valuation: High = 3; Med/High = 2.5; Med =2; Med/Low = 1.5; Low = 1.
Short-Term = ST, Long-Term = LT.
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In Table 18 below, Company Y‟s strategic alternatives in section 5.1 evaluated against
Company Y‟s weighted goals, identifies Company Y‟s best strategic alternative over the short-
term and long-term.
Table 18 Company Y’s Valuation Predictions
Strategic Alternative
Goal Status Quo
(ST/LT)
Expand
Capability &
Niche Market
(ST/LT)
Cease
(ST/LT)
Downsize
(ST/LT)
Expand by
Partnership
or
Acquisition
(ST/LT)
Client
Relations
40%
25%
40%
62.5%
20%
25%
30%
62.5%
40%
62.5%
Leadership 40%
25%
40%
62.5%
20%
25%
40%
62.5%
40%
62.5%
Expertise 40%
20%
50%
50%
20%
20%
50%
40%
60%
50%
People 50%
20%
62.5%
20%
25%
20%
37.5%
20%
50%
25%
Profitability 15%
20%
22.5%
50%
37.5%
40%
37.5%
40%
30%
50%
Average 37% ST
22% LT
29.5%
43% ST
49% LT
46.0%
24.5% ST
26% LT
25.25%
39% ST
45% LT
42.0%
44 ST
50% LT
47.0%
Based upon Boardman, Shapiro and Vining 2004
Key: Valuation: High = 3; Med/High = 2.5; Med =2; Med/Low = 1.5; Low = 1. Short-Term = ST,
Long-Term = LT.
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Three roughly-equal strategic options emerge from the above weighted averages: a)
expand the division by partnership or acquisition. b) expand the division‟s capability by
recruiting external resources. c) downsize the division (Table 18).
A divisional growth strategy would first require a clear set of performance objectives,
aligned with the firm‟s corporate strategy. Successful execution of the business level strategy
would require strong leadership and management oversight.
Company Y must ensure that such a growth strategy is possible given the potential range
of both internal and external conflicts of interest across the firm‟s services and client base.
5.6 Scenario Analysis for Company Y’s Strategy Selection
5.6.1 Best-Case Scenario Analysis
The best-case scenario for Company Y is a heating and energy efficiency sector that
prefers the environmental consultants to be the primary supplier on bid, feasibility, plan, design,
build, test, and monitor phases of geoexchange retrofit and new construction projects.
On single-dwelling retrofit and new construction projects, the environmental consultant
would also be the project manager and responsible for all project phases. The project manager
sub-contracts some or all of the project phases to a full-service geoexchange specialist.
Under this best-case scenario, expanding the division through acquisition would instantly
increase the firm‟s client base, operating costs and revenue. The acquisition of another firm, for
example of architects, would see Company Y inherit large and small projects, and increase the
scope of the firm‟s services to include LEED green building design.
This strategy would also increase the firm‟s exposure to new clients while capturing a
higher percentage of project revenue.
On multiple-dwelling and ICI retrofit or new construction or District Heating Scheme
projects the environmental consultant would sub-contract some or all of the project work to a full-
service building design firm. However, now that the division has expanded by acquisition it is
able to capture the feasibility, plan, design, build and test project phases on a green building
project with heat and energy efficiency, including geoexchange components.
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5.6.2 Worst-Case Scenario Analysis
The worst-case scenario for Company Y is a heating and energy efficiency sector that
prefers no environmental consultant involvement across any of the bid, feasibility, plan, design,
build, test and monitor phases of geoexchange retrofit and new construction projects.
Under this worst-case scenario, an expansion of the division‟s services by acquiring
another firm would benefit Company Y only if the acquired firm maintained its original and
separate identity, but was still able to integrate with Company Y‟s existing services.
5.6.3 Most Likely Scenario
The most-likely case scenario for Company Y is a heating and energy efficiency sector
that prefers the environmental consultants to be the primary supplier on two or three components
of the bid, feasibility, plan, design, build, test, and monitor phases of small retrofit and new
construction projects. These phases are most likely to be feasibility, design and testing.
On larger projects such as a multiple-dwelling or ICI retrofit or new construction or
District Heating, the environmental consultants may be involved in the feasibility and testing
phases, but the majority of the project work is split between the full-service building design firm
and the geoexchange installer, especially on green building projects.
Expanding the division through acquisition of a firm of LEED accredited architects and
planners would instantly increase Company Y‟s market presence, client base, operating costs and
revenue. A LEED green building design service would stand-alone, or vertically integrate with
the firm‟s contaminated land site assessment, remediation, or energy and carbon services.
Company Y‟s newly integrated services would prove attractive to a heating and energy efficiency
sector or green building design sector that prefers the involvement of environmental consultants
across all phases of small and large geoexchange or green building projects, or buyers who prefer
some involvement at the feasibility and testing phases.
In conclusion, the best alternative strategy over the short and long-term is expansion by
acquisition. Expansion by partnership will not provide Company Y with sufficient revenue
growth opportunities.
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6: CONCLUSIONS AND RECOMMENDATIONS
6.1 Conclusion
Company Y‟s Renewable Energy division‟s geoexchange service has diversified the firm
away from its core competencies in EIA and ESA to compete as a cost leader in a moderately
competitive market space occupied by experienced incumbents. The division‟s cost leadership
stance has failed to penetrate its target market.
The division also faces several external challenges: 1) an uncertain geoexchange market
until the publication of BC Hydro- GeoExchange BC‟s Phase I Evaluation project report in May
2011; 2) the residential retrofit and single-dwelling new construction market in B.C. is unlikely
to grow without BC Hydro‟s support; 3) a lack of financial incentives reduces buyer demand in
the single-dwelling residential B.C. and Alberta geoexchange market; 4) near zero growth in the
construction industry; 5) an economy that is slow to recover from the 2008 recession.
The best alternative strategy over the short and long term is to expand the Renewable
Energy division by acquisition. This would instantly increase the division‟s market presence,
client base, operating costs and revenue. However, expansion by recruitment of better qualified
external resources and downsizing of underperforming employees were close second and third
alternatives, which suggests that only a combination of alternative strategies executed in sequence
will allow Company Y to grow this division while meeting the firm‟s current business goals.
Company Y‟s financial performance over 2008, 2009 and 2010 falls short of the firm‟s
strategic goal and demonstrates that the current corporate level strategy is not producing the
desired results.
The firm needs to change its corporate and business level strategies if it is to remain
profitable. Maintaining the status quo will ensure that profit margins remain significantly below
target; and, the Renewable Energy division continues to underperform, and operate at a loss.
In conclusion, the firm needs to plan and execute a strategy for change that will improve
the firm‟s performance, profitability and secure a sustainable competitive advantage for each
service.
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6.2 Suggested Implementation Plan
1. Review Company Y‟s Current Financial Position: A full financial and employee review
will identify sources of underperformance across all of Company Y‟s divisions.
2. Select the Change Management Team: The CEO should select a small management team
to develop and execute the firm‟s new strategies.
3. Strategize: Company Y should create a new vision, a new corporate strategy, and a new
brand for the company. If the firm is to remain competitive in the environmental market
it must develop a clear set of business level strategies and performance objectives aligned
with the new corporate strategy,
4. Create a Sense of Urgency: The CEO should secure key stakeholder buy to ensure the
successful implementation.
5. Execute new corporate and business level strategies: Company Y must execute its change
strategy in a manner that aligns with the firm‟s business values.
6. Monitor each division‟s performance: Company Y‟s corporate and business level
strategies will contain performance measurements that must be monitored, controlled and
amended if necessary.
7. Downsize or upsize resources: Company Y must downsize or upsize in response to
internal firm and external conditions.
6.3 Recommendations
6.3.1 Underperforming Employees in Company Y’s Renewable Energy Division
Company Y should re-assign the Renewable Energy division‟s underperforming
employees to other divisions where they needed. If this is unlikely to be productive, let go
underperforming employees. This would reduce the firm‟s operating costs while the firm
competed in its chosen markets.
6.3.2 Unbillable Employees in Corporate Services
Company Y should let go unbillable employees in Corporate Services, and only maintain
a skeleton service. This would reduce the firm‟s operating costs.
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6.3.3 Conflicts of Interest
Company Y should resolve any conflicts of interest that constrain the firm‟s ability to
remain competitive in external markets.
6.3.4 Downsize, Expand and Re-Brand the Renewable Energy Division
The renewable energy division‟s capabilities should be expanded and re-branded and
would involve a combination of events: 1) an immediate shift from a cost leadership to a
differentiated focus strategy; 2) a weekly performance check to assess the impact of the new
strategy; 3) an immediate headcount reduction of underperforming employees if performance
objectives are not met; 4) if external market conditions are favourable then seek to acquire a firm
of LEED accredited architects and planners who bring market share, expertise and clients to
complement Company Y‟s existing services portfolio; 5) re-brand the division; 6) if external
market conditions continue to be unfavourable then downsize the division further.
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Interviews
January 22nd
2011 An introduction to Company Y‟s VP of Development was facilitated by Dr
Mark Frein via e-mail.
February 2nd
2011 In person client meeting with Company Y‟s CEO, and Company Y‟s Director
of IT and Financial Controller.
February 9th 2011 Telephone meeting with Company Y‟s Director of IT and Financial Controller
to discuss the firm‟s organizational structure.
February 14th 2011 An in person client meeting with Company Y‟s CEO to discuss the firm‟s
strategy, organizational structure and financial performance.
February 15th 2011 Telephone meeting with Company Y‟s Director of Renewable Energy
division, to discuss the firm‟s Renewable Energy service.
February 16th 2011 Telephone meeting with a Project Manager/Energy Carbon Services Manager
in Company Y‟s Environmental Management team to discuss the firm‟s carbon and energy
projects/carbon and sustainability service.
Websites Reviewed
http://www.infomine.com/countries/SOIR/Canada/welcome.asp?i=canada-soir-3
http://www40.statcan.gc.ca/l01/cst01/manuf10-eng.htm
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http://en.wikipedia.org/wiki/Green_economy
http://www.stantec.com/investorrelations.html#ir_overview
http://www.eco.ca/publications/default.aspx
http://www.Competitor A.com
http://www.Competitor B.com
http://www.Competitor C.ca
http://www.Competitor D.com
